EarningsBeats.com Digest for November 26, 2021
|
Fall Special: Only a Few More Days...
Want to get in on the best deal of the year? Check out our Fall Special - when you purchase an annual membership, earn a minimum of two bonus months and up to 1 year bonus! Don't delay, this offer won't last.
When Is It Time To Sell A Stock?
This obviously depends on several factors and I can't possibly cover all those factors in one brief article. But I will focus on one factor to always consider. If you're a short-term trader, then negative divergences are literally one warning sign that beats us over the head to sell. Many times, when a negative divergence emerges on a
daily chart, we subsequently see a price move lower to (1) the PPO centerline, and/or (2) the 50-day SMA. Currently, truckers ($DJUSTK) are one of the best industry groups, but they're showing slowing price momentum to the upside:
There's a LOT to like about this chart. First of all, truckers only go up for one reason - a strengthening economy. There's no other reason to pile into this group. The above chart shows tremendous volume that's accompanied this 5-6 week advance. The AD line has soared. But......check out the PPO. As prices have continued rise, we're seeing hesitation AND a falling PPO. It doesn't guarantee us that truckers will move
lower. Instead, it simply provides us a warning. It's similar to a meteorologist saying there's a 50% chance of a severe thunderstorm. While you might be someone who walks 3 miles a day, that forecast is one "warning sign" that you might not want to take that walk in the afternoon. It doesn't mean you will get a bad storm, it simply means the chances are elevated. That's what a negative divergence means to me. The odds of selling are increasing, not
guaranteed. So, if I owned trucking stocks, I might think about selling and not "taking that walk".
|
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
|
|
|
|
