Five ways to tell if a stock is about to take a dive

Last week I wrote about five characteristics of a winning stock, but as every seasoned investor knows, knowing when to sell a stock is just as important (some would argue more important), than knowing when to buy a stock.

Poor timing on an exit trade can be much more costly than poor timing on buying a stock, and a lot of profits can be left on the table if you miss the signs that a stock in your portfolio has started to run out of steam.

Taking this into consideration, this week we are going to look at five signs that a stock is running out of steam. Having a better understanding of the warning signs of a stock that is about to trade lower is a key ingredient to becoming a better investor, and will help boost returns down the road.

In some cases, it is not so easy to spot a stock that is losing its momentum, while in other circumstances, such as a big earnings miss, or weaker than expected earnings forecasts, it is easy to spot these stocks.

There is a wide-range of warning signs that a company can put off to signal rough times ahead. This week we will begin our discussion by taking a look at five signs that you can use as an indicator that perhaps it is time to exit a position or remove from your buy watch list.

Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

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