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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (40063)	8/17/2003 3:11:23 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 69233

Investor's Business Daily Most Sell Signals Show Up In Charts, Not Fundamentals Friday August 15, 10:02 am ET By Craig Shaw The market looks ahead. A stock may skyrocket in anticipation of future profit growth. Likewise, a stock often dives long before trouble shows up on its balance sheet. The bottom line is crucial in telling you where to invest your hard-earned cash. But when it comes to selling, rely mainly on charts. When you buy a stock, you employ fundamental and technical analysis. The stock should sport solid earnings and sales growth and hail from a leading sector. It should be clearing a sound basing pattern on an upsurge in trading volume. Most important, the market should be in a confirmed uptrend. With selling, technical indicators take charge. Most stock declines begin long before bad news shows up in an earnings report or on the cable TV shows. Institutions may get wind of a future growth slump or troubling merger. Simple profit-taking may sink the stock. Or the market may turn south, dragging down even the strongest leaders. To preserve your profit, watch your stock for sell signals. If it violates support lines, logs new highs on feeble turnover or slumps on mounting volume, be wary. A scary skid may be in the wings. CKE Restaurants couldn't have looked much better at its peak. The operator of fast-food restaurants made a strong turnaround in 1996 after improving its Carl's Jr. brand name through innovative advertising and store remodeling. The stock ran up nearly fourfold in 17 months after its April breakout, reaching an all-time high of 37.50 the week ending Oct. 4, 1997 (Point 1). CKE's Earnings Per Share Rating was 98, its Relative Price Strength Rating 91. Profit growth the prior three quarters ranged from 56% to 64%, sales growth from 54% to 89%. Its three-year annual EPS growth rate was a stellar 175%. If you'd only paid attention to those numbers, you'd have thought you were sitting pretty. But the stock's chart said otherwise. CKE peaked in February 1998 (Point 2), then built a ragged five-month base. Volume trailed off as the stock approached its old high (Point 3), and it lacked the strength to equal that mark. It then began to skid on heavy trade, failing repeatedly to reclaim its 50-day moving average (Point 4). Those sell signals were your clue to escape with profit intact despite the stock's shining fundamentals. CKE fell as fast as it climbed, losing 63% in three months. It now trades around 6.