Wednesday, August 8, 2012

William O' Neal 4


It is far better to sell early. If you are not early, you will be late; you'll
never sell at the exact top, so stop kicking yourself when a stock goes
higher after you sell. The object is to make and take worthwhile gains
and not get excited, optimistic, or greedy as a stock's price advance gets
stronger! The old saying is, "Bulls make money and bears make money,
but pigs don't."


Nathan Rothschild said, "There certainly is. I never buy at
the bottom and I always sell too soon."


One simply must get out while the getting is good. The secret is to
hop off the elevator on one of the floors on the way up. In the stock
market one good profit in hand is worth two on paper.



If you have a total of $5000 to $20,000 to invest, three
stocks might be a reasonable maximum. A $3000 account could be confined
to two equities. Keep things manageable!




The winning investor's objective should be to have one or two big
winners rather than dozens of very small profits. It is much better to
have a number of small losses and a few very big profits.




No well-run portfolio should ever have losses that have been carried
for six months or more. Keep your portfolio clean and in touch with
the times. Good gardeners always weed the flower patch.




When you purchase a mutual fund, you are hiring professional management
to make decisions for you in the stock market.



Therefore, price patterns taken from successful stocks in the past few
years should definitely be used as models or precedents for future
selection of successful stocks. Attorneys and geologists rely heavily on
precedents; why shouldn't you do the same?





One of the most fundamental chart-base price patterns looks like a cup
with a handle when the outline of a cup is viewed from the side. Cup
patterns last, in time duration, from 7 to as many as 65 weeks (most are
usually three to six months). The usual percentage correction from the
absolute peak to the low point of the price pattern varies from 12% or
15% to 33%.


When handles do occur, they should form in the upper half of the
overall base structure, as measured from absolute peak to the low of the
cup. This should be above the stock's 200-day moving average price
line. Handles forming in the lower half of a base or completely below
the stock's 200-day line are weak, failure-prone price structures.
Demand up to that point has not been strong enough to enable the
stock to recover more than half of its prior decline.





A saucer with a handle is a price pattern similar to the cup with a handle
except the "saucer" part tends to be longer and more shallow. If
using the name "cup with handle" or "saucer" sounds unusual, consider
that for years you have recognized and called certain constellations "the
big and little dipper."


A double-bottom price pattern looks like the letter "W." This pattern
does not occur as often as does the cup price structure. It is usually
important that the second bottom of the "W" touch the price level of
the first bottom or, as in most cases, undercut it by.one or two points,
thereby creating a shakeout.


A high, tight flag price pattern is rare and occurs no more than once or
twice a year. It begins by moving approximately 100% to 120% in a very
short period of time (four to eight weeks) and then corrects sideways



if you want to produce superior results in the stock market, you
can't ignore the market strength or weakness of the 200 industry groups
and subgroups.








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