Posted by: Randeep Singh | November 5, 2007

Investing Tips

1. Decades of research support a strategy in which you buy stocks only after at least one of the indexes has staged a follow-through day. That’s when the market confirms a fresh rally by surging about 1.7% or more, with an increase in volume over the session before.

2. Every rally eventually ends. A distribution day occurs when one of the major indexes falls on heavier trading than in the previous session. Three to five distribution days in a span of a few weeks should make investors wary and consider raising cash.

3. Breakdowns in leading stocks are an even stronger indication you should stop buying and take profits.

4. If a stock that you bought surged 20% or more during the first one to three weeks after its breakout, try to hold for eight weeks. If you’re sitting on big gains, consider taking some profits. If your stock is falling sharply or is threatening to round-trip from a gain to a loss, sell it.

 5. When industry leaders sell off, it’s a good bet that others in the same group will go down too.

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