When to Sell Stocks: Here’s why new highs on low volume can halt a big run

After a stock sees a volume dry-up at the peak, be ready to sell at least some shares when it drops very hard through the 50-day moving average on high volume. Or, the stock may shatter a long-term trend line.

When To Sell Stocks: Use the 50-DMA Line

A stock's volume often tracks above its 50-day moving average when its price climbs to a new high. This is where the stock has never been before.

There is no overhead resistance, and buyers should be luring offers with their increasing bids.

If this doesn't drum up the increased volume, you have a problem. Remember that the uptrending stock already has had institutional support behind it. That's how it got to be an uptrending stock.

What do you think would happen if the big-money funds stopped buying? The stock would fall under its own weight.

And if you find the stock consistently making new highs without solid volume, that's a sign that the tide may be turning. That is, sellers may have more influence over the stock's future prices than the buyers.

(Mayuresh Joshi, Head - Equity Research, William O'Neil India)

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