I feel like I posted this, but can’t find it.
• How To Maximize Your Profits: 8-Week Hold Rule Helps Latch On To Big Winners
• IBD has two main rules for selling a stock: Take your profits at 20% to 25% and cut your losses at 7% to 8%.
• But there is also a third option, one that can take your 25% profit and turn it into much more. It’s called the eight-week hold rule.
• If your stock produces a gain of 20% or more within three weeks of breaking out of a proper base, you may have a true winner on your hands.
• IBD research shows that in many cases, stocks that make this quick and powerful move are capable of doubling or tripling in price. Unless your stock shows a clear sell signal, you should sit on your hands for the first eight weeks of such a move.
• Unless you are in danger of a complete round trip of gains, hold your stock for those eight weeks. It may appear to wane as it pulls back to or just below the 10-week moving average, but this action is normal.
• After the eight weeks lapse, it is time to reassess the stock. It’s likely your stock has returned to or surpassed the area of initial strength, and you can then decide when to sell and take profits.
• From his book:
○ Major advances require time to complete. Don’t take profits in the first 8 weeks of a move unless a stock gets in serious trouble or is having a 2 or 3 week climax run up on a stock split in a late-stage base.
○ Stocks that show 20% profit in less than 8 weeks should be held through the entire 8 weeks unless they are of poor quality without institutional sponsorship or strong group action.
○ In many cases, stocks that move dramatically by 20% or more in 1-4 weeks are the most powerful stocks of all - capable of doubling or tripling. Try to hold it through the first couple of times it pulls back in price or slightly below the 10-week moving average price line. Once you have a decent profit, you could also try and hold the stock through its first short-term correction of 10%-20%.
