I don't know when a play is complete...for example, the other day, you mentioned a stock WM, telling the stop figure, the buy figure, and the target figure. The first and second day it did nicely, then it stated to fade. Do I stay, giving it a chance to hit target, and yet possibly having it go down further to the stop and losing money, rather than taking a small profit? In other words... when do I get out? (June 23, 2001)
WM was a breakout from a 5-month cup with handle pattern that made the breakout on huge volume 8 sessions ago. The stock ran up to 30.38 and then has pulled back the last two sessions on much lower volume, holding above the pivot point and the 18 day MVA. This is known as a test of the breakout, and each stock that breaks out of such a pattern has a 50-50 chance of testing the breakout point. If it holds (and the good volume on the breakout is a sign that it should hold if the market as a whole does not roll over), the stock will rebound here, and many of the best gains a stock makes comes after a test of the breakout. In a choppier market we will take profit it if hits our target point and starts to turn back down. The market right now has been tougher even on breakouts. We tend to take some profits on our positions when they turn back after the initial breakout run, but keep others for the move back up off of the test. If it is successful, i.e., the stock starts back up on volume back at average or better, we can add to positions again and take the ride back up.
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