Page 1144 - How to Make Money in Stocks Trilogy

Selling Checklist 129

AOL – 1999 AOL rose 427% from breakout in less than 6 months Price
Weekly Chart 150
8-week period ends: 140
130
Up 73% from buy point
120
Rises over 20% in 3 weeks: 110
8-week hold rule helps Triggers 8-week hold rule 100
you identify—and hold on 90
to—potential big winners.
Breakout: Week 1 80
70
8-week rule helps 60
you hold through
shake out, capture 50
bigger gain 46
42
38
Split-adjusted prices
© 2013 Investor’s Business Daily, Inc.
Volume
50,000,000
30,000,000
16,000,000
Dec 97 Mar 98 Jun 98 Sep 98 Dec 98 Mar 99
Without the 8-week hold rule, it’s easy to get nervous and sell a big winner too soon.

3 Notes on the 8-Week Hold Rule

1. Don’t apply this rule to just any old stock. Make sure it is a true market
leader with superior earnings and sales growth, solid institutional spon-
sorship and other CAN SLIM traits.
2. Note that the week of the breakout counts as week #1 in the 8-week
count. See the examples in the previous two charts.
3. This rule only applies to stocks that have just broken out of a proper base.
Do not apply this rule to a stock that suddenly shoots up 20% or more
without first breaking out of a cup-with-handle or other chart pattern.
For example, a stock may shoot up 20% or more on a good earnings
report, but that only triggers this rule if the move comes as it breaks out
of a base (see Chapter 6 for more on bases and chart-reading).