The purpose of this Market Call section is to
educate readers in technical analysis patterns and indicators. As with all investment
information, you need to research information and consult your financial advisor before
initiating any strategies that are contained in Market Call.
Also, you must realize that as with all trading strategies,
opinions can change quickly depending on market conditions and developments.
This column tries to present historical examples, potential set
ups, and examples of entry and exit strategies.
Focus on Exit – Take what the market gives you, the
market is always right.
Over the past few days we have seen some very nice rises in
stocks. This is a good time to look at exit strategies for stocks. We know what support
and resistance looks like and can draw trend line across these key areas. We have seen how
a tool like moving average crossovers can help keep you in a trend.
Let's look an exit strategy using Schlumberger Ltd, SLB as our
example. After a move down, SLB formed a support at 59 on June 24,25,and 28. A breakout
from this support occurred on June 29 when the moving average signaled a Buy and the stock
broke a channel resistance. June 29 and 30 saw SLB move to a high of 63 7/8.
Today is a different story for SLB. The stock all day had bars
with lower highs showing that there is overhead supply of stock every time the stock tried
to rally. The general market was up, however SLB failed to respond.
The move from 59 to 64 is about a 62% retracement of the last
down move. SLB is now sitting on the bottom of a channel support at 62 and also is ready
to cross below the longer period moving average.
If SLB drops below 61 � on the open or during the day, I would
exit any long positions. This same theory can be applied to many stocks at this time.
