Okay, so everyone knows it’s almost impossible to predict what the stock market will do. If that were the case, there would be a lot of millionaires who made their fortune in the market … wait, there are many millionaires who made their fortune in the market. Ok, if MORE people could predict what the stock market would do, there would be MANY millionaires who have made a fortune in the stock market and certainly a few more billionaires to join Warren Buffet.
Now, once again, no one can predict the future. However, there are a few tools that investors can use to place odds in their favor. Nothing is guaranteed, but when the chances of something happening are in your favor, you can be sure that you will have a much better chance of succeeding. One of the tools I want to get into is knowing when to sell shares. I also want to delve deeper and talk about certain days, in general, that are good for sale.
Let’s think of an example, based on recent events, you know that stock markets tend to have massive declines if something really bad happens in the world. A good example that everyone is probably familiar with would be the 9/11 attacks on the World Trade Center in New York. The market has fallen so much that trading has stopped. The next day, the market fell even further! However the day after that major event, the market tried to gather (come back) a little. That would have been a good day to sell.
The Monday after the stock options (usually the third Friday of each month for most stocks) expire it’s a good day to sell shares. In the third week of each month, stock options and stocks experience high levels of volatility and this is usually at the bottom. What I mean by this is that stock prices tend to fall somewhat significantly in the third week of each month.
If stock prices face high fall days, the day after that day down it will usually be a rally, as short sellers will also try to cover their positions as other investors see the shares as oversold. Stocks NEVER go straight down and never go straight up. There are always days of decline and days of growth between the transition of the stock to lower or lower maximum values.
The first trading day after a vacation. Trading is usually easy until a weekend or a holiday, as most brokers take their vacation. The transaction then tends to increase once brokers and large traders return from vacation.
days when there is wonderful news about a company such as earnings or a new product. Positive earnings reports on a stock make excellent days to sell a stock. This type of news usually sends a higher stock price, and these are perfect days to sell.
The bottom line is that you should learn to identify the events that would drive up the price of a stock. Finally, as a general rule, NEVER buy on an UP day, always look to make a profit on the days above.