Ok, everyone knows that it is practically impossible to predict what the stock market will do. If that were the case, there would be plenty of millionaires who made their wealth in the stock market…wait, THERE ARE plenty of millionaires who made their wealth in the stock market. Ok, if MORE people could predict what the stock market is going to do, there would be a lot MORE millionaires who made their fortune in the stock market and definitely a few more billionaires to join the likes of Warren Buffet.
Now, once again, no one can predict the future. However, there are some tools that investors can use to turn the odds in their favor. Nothing is guaranteed, but when the odds of something happening are in your favor, you can be sure that you will have a much better chance of success. One of the tools I want to get into is knowing when to sell stocks. I also want to go deeper and talk about specific days in general that are good for selling.
Let’s think about an example, based on recent events, you know that stock markets tend to have massive crashes 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 fell so much that trading stopped. The next day the market fell even more! Nevertheless the day after that big event, the market tried to rally (recover) a bit. That would have been a good day to sell.
The Monday after the stock option (generally the third Friday of every month for most stocks) expires It’s a good day to sell stocks. In the third week of every month, stock options and stocks experience high levels of volatility and this is usually on the downside. What I mean by this is that stock prices tend to drop significantly during the third week of every month.
If stock prices experience large declines, the day after that day of inactivity it will usually be a rally as short sellers try to cover their positions and other investors see the stock as oversold. Stocks NEVER go down and they never go up. There are always low days and high days between a stock moving to higher highs or lower lows.
The first trading day after a holiday. Trading is usually light before a weekend or before a holiday, since most brokers take vacations. Trading tends to pick up once brokers and big traders return from vacation.
Tea days when there is good news about a company like profit or a great new product. Positive earnings reports on a stock are good days to sell a stock. This type of news usually sends the stock price up, and these are perfect days to sell.
The bottom line is that you must learn to identify the events that would cause a stock to rise in price. Lastly, as a general rule of thumb, NEVER buy on an UP day, always look to profit on the up days.
