Tupperware's Stock Is At Key Juncture: Sell Or Hold?


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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.

Tupperware ( TUP ) 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 point.

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 advance.

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.

A smart investor , though, won't wait just to grab the dividend. That has no part in IBD's sell strategies.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Investing Ideas

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