Most books on investing in
today's stock market
are silent on selling.
Yet without a sell strategy, the investor is lost.
The IBD approach is disciplined. Choices and rules are
involved, but the investor knows ahead of time what they are.
Let's take a look at a stock that is at a key juncture now.
) broke out of a cup-with-handle base in November in a
start-and-stop fashion. Big volume didn't kick in until the week
ended Dec. 7, and that wasn't the end of the stock's hesitation.
Tupperware returned to the 10-week line in late December.
The hesitation, though, never came close to triggering the 8%
sell rule. At its worst, the stock fell 2.5% below the 63.69 buy
That's rule No. 1. If a stock falls 8% below your entry, you
sell. Tupperware passed this initial test. There was nothing in
the start-and-stop action that said sell.
In January, the first-stage breakout finally found traction.
By Feb. 1, eight weeks after the Dec. 7 volume surge, Tupperware
was 20% above the 63.69 buy point.
The stock soon rose more than 25% above the ideal entry and as
of Wednesday's intraday action was about 22% extended.
Here is where the investor must make a decision. The IBD
approach encourages profit-taking when gains reach 20% to 25%
past the buy point. Most stocks begin consolidating after such an
An investor who holds is making a decision to ride out the
next base-building effort.
In late January, Tupperware announced a 72% increase in the
quarterly dividend. The 62-cents-a-share payout will be paid to
shareholders of record March 20.
, though, won't wait just to grab the dividend. That has no part
in IBD's sell strategies.