Follow Sell Rules To Avoid Weak Market

+ A bad market can manifest itself in various ways.

+ Sometimes the start of a correction, or bear cycle, will be painfully obvious.

+ The major indexes will flash a series of big distribution days in a short time. The economy or global hot spots may contribute, ushering in bad news daily. Portfolios will quickly turn to dust.

+ But other times, the market may provide more subtle hints. You'll see only sporadic selling in higher volume. There may not be any obvious news items suggesting bad times ahead. The masses may often take a bullish stance, just as the market's hitting its peak.

+ Fortunately, you don't need tea leaves to predict when a bad market will occur. Actually, you don't necessarily need to identify a bad market as it's happening at all.

+ Following a sound set of sell rules with your own stocks will force you out of a bad market, even if you don't know it's a bad market.

+ The cardinal rule of investing is to always cut your losses at no more than 7% to 8% from your buy point. This tack allows you to avoid big losses that can cripple your portfolio and your confidence.

+ If you see your winning stocks showing choppy action, consider taking some moderate profits of about 20%.

+ Stocks that violate key support levels such as the 50-day moving average can also be sell candidates.

+ By staying attuned to how your stocks are acting, you can make informed decisions on each one.

+ Often you'll find that selling stocks at the right time will usher you safely to cash on its own, even if you haven't yet spotted any obvious weakness in the broad market.