Page 1145 - How to Make Money in Stocks Trilogy

130 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

What to Do When the 8 Weeks Are Up

After the 8-week holding period ends, you have a choice to make: Sell or
hold the stock?
Here are a few questions to help you decide:

• Has the stock climbed substantially higher during those 8 weeks, or have
you given back most of your gains? Is your former good gain on the verge
of turning into a loss?
• If the stock has pulled back, did it find support at key areas, such as the
10-week moving average line or a former area of resistance? That would
show big investors are holding onto their shares. Or has it been falling
below those key benchmarks on heavy volume? That shows fund man-
agers could be liquidating their positions—and it may be time for you to
do the same.

• Is the overall market still in a confirmed uptrend, or has the outlook
changed to “uptrend under pressure” or “market in correction”?

When you combine your answers to those questions with your own risk
tolerance, the decision to sell or hold should become fairly easy. Keep in
mind: You don’t have to sell all your shares. You could choose to sell just a
portion. That lets you lock in some of your profits but still keep a position in
case the stock shoots higher. And if the stock is forming a new base or run-
ning into trouble, you can always sell now and buy it back if the stock
rebounds and again passes the Buying Checklist.

Profits Come to Those Who Grab Them
Not every stock you buy will be the next Priceline.com, Netflix or
Lululemon Athletica—with a 100%, 500% or 1,000%+ gain.
And even when you do latch on to big winners (and you will if you stick
to these checklists and routines), those stocks don’t go straight up. They take
breathers along the way—and if the market is particularly weak, they may
drop sharply before they (hopefully) resume their climb.
That’s why you need offensive sell rules to cash in your profits while you
still have them.