For the February 7th installment of our Webinar series, The PlayBook with Mike Bellafiore, Mike discussed Reasons2Sell: Getting The Most Out of Your Trades. If you missed this presentation go to www.smbtraining.com/blog
Most Common Reasons2SellHits your price targetIntraday uptrend brokenBreaking news in the stockMarket is at important technical resistanceBreakings news in the marketUnusual seller on the tape
Most Common Reasons2Sell Clear buying pattern dissipates Time clock goes off in your trading brain Too steep Too much of a Pullback Trading day ends 8/13/12
1. Hits Your TargetHave a target or set of targets before you enter a tradeFollow your plan and hit out when your target(s) are reached
Consolidation at the 43.00 level provides short entry with a 41.50 price targetPrices reaches 41.50 target,then pulls back into the Close
2. Intraday Uptrend BrokenZoom out to the 5 minute or 15 minute chart after 10AMIfa series of higher lows is broken, hit out
...after sharp down move, it fails to make a new low, providing a clear signal that the downtrend has endedGNC begins cleardowntrend off the Open,and short opportunity isprovided when a 38.45buyer drops...
3. Breaking News In The StockIfunexpected news suddenly comes out, hit out and re-evaluateItcould mean a huge fundamental change in the company
...however, after breaking down through range, JCPA held offer appears at CEO announces better than22.00 in JCP, providing a expected store sales for May,short entry opportunity... leading to a quick reversal
4. Market Is At ResistanceMost stocks follow the overall marketIfthe stock and the market are both nearing big resistance, higher probability of a reversal
SPY reaches technicalresistance area that ithas failed to hold abovefor the past severaldays...
Simultaneously, BACreaches 7.70 resistancearea… …but sells off when the market fails at resistance
5. Breaking News In The MarketIf a big event occurs and causes the market to move erratically, hit out and re-evaluateCan be an economic number, Supreme Court decision, terrorist attack, etc.
...at 14:00, FOMC announcement is released, and the statement is bearish for stocks, leading to an immediate selloff into into the CloseOn 8/1, CAT begins to form uptrend after11:00, providing an opportunity to getlong...
6. Unusual SellerIfthe stock tries to get above a price several times and fails, hit outIfyou notice a lot of selling at a level and the seller steps lower, hit out
...unusual seller appears at 69.50, a signal that longs should exit their position and re-evaluateFOSL begins clear uptrend in themorning, with several opportunitiesto get long...
7. Buying Pattern DissipatesIfa stock is showing a distinct buying pattern, but it disappears, hit outThis can be a set of consistent pullbacks, a set of consolidation flags, etc.
...once the buyer disappeared above 50.25, the buying pattern was clearly gone, and the stockAfter ranging off the Open, a pulled back to themassive buyer appeared on the original pricetape at 49.54, driving the priceof the stock up over .70c veryquickly...
8. Time ClockIfafter a specified amount of time the stock hasn’t done what you expected, hit outWait for the stock to give you more information before getting back in
Seller appeared above 21.00, offering excellent short opportunity…FMCN was strongoff the open due tostrong earningsnews from otherChinese stocks… …however, was not able to move away from the price and stayed there for several hours – a signal to exit the position and re-evaluate
9. Too SteepIf a stock goes down or up too far and too fast, it will likely bounce right backTake some off into the move and look for a place to re-enter
...however, a move of over 1 point in 30 minutes is quite steep for this stock, a signal that a pullback is likely to follow...CVS drove higher off theOpen the day after beingsold off on earnings...