Spotting The Sell Point: Amazon Signaled It Was Ready To Fall.(B)(INVESTOR'S CORNER)

Byline: CHRISTINA WISE

Buying the right stock at the right time is only half the profit equation. To hold onto your profits, you have to know when it's time to sell.

By analyzing a stock's daily and weekly price and volume action, you can determine when it's running out of steam.

One danger signal is when a stock falls through its 10-week or 40-week moving average. A stock that has institutional support will fall to those major moving averages, then bounce higher as large investors step in to buy shares. But if institutions are unloading their holdings rather than adding to them, the stock will slice through those trend lines and continue to fall.

Another worrisome sign is a bearish reversal. In that case, the stock tries to head higher, but finishes near the bottom of its daily or weekly price range. A downward reversal on heavy volume is an even bigger red flag.

Even big winners can break down. Consider Amazon.com. Back in March 2003, the Internet pioneer had survived the tech bubble and begun turning a profit. Its stock, which once traded as high as 113 a share, bottomed in October 2001 below 6. It then began working its way back up.

Amazon spent much of late 2002 and early 2003 carving a cup-without-handle base. It then broke out on March 17, 2003, moving past its 25.10 buy point in brisk trade, ...