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How do you tell a stock correction from its run-up climax (right before it crashes down)?
I’m reading several of William O’Neil’s books on stock investing and huge gains in stock prices actually worries me than losses. I really don’t know when to sell. O’Neil says to sell when the stock is on the way up but I think it’s better to set a trailing stop to follow on its gains to avoid missing out on huge surges. O’Neil points out no matter how great a stock is, it will top at some point and crash in the future. Since stocks have many corrections, I’m having trouble knowing how to spot the difference correctly. I’m currently in Ford (F) and the stock has surged 16% total in four days and I don’t know if it’s sell time. O’Neil suggests that a stock climax is when the last trading days will experience run-ups significantly greater than the previous ones. I don’t think that’s the case with Ford yet and believe there’s more room to grow. Should I hold Ford or set a trailing stop on it? Please advice. Thank you in advance.
I would suggest you go to www.bigcharts.com and enter “F” in the symbol line.
When the chart comes up, at the top of the page next to the symbol is a drop down. Click the down arrow and select “All data”.
That chart may tell you all you want to know regarding Ford and whether or not it is overvalued, undervalued or just now in its long-term trading average.
Could Ford continue to go up? Absolutely.
Will it? Who knows.
If it were that easy to predict, NO ONE would ever lose money in the stock market.
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