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Byline: JUAN CARLOS ARANCIBIA
When your gains start to slip away, investors have a natural instinct to sell and cash in even a small profit.
But often the right decision is to hold on and ride through the stock's correction. All big winners undergo normal pullbacks, right themselves and continue advancing.
How do you know if your stock has the stamina to make it through?
The stock's price and volume action is your primary guide. Also note which stage of the advance your stock is in. And don't forget the health of the general market.
If your stock is making a gentle downward glide, that's a good indication the pullback will turn out OK. On the other hand, if the stock makes sharp drops on heavy volume, major investors are probably heading for the exits.
Watch for pullbacks to the stock's 10-week and 50-day moving averages. Look for the stock to find support at these levels. It's especially bullish if shares rally back on above-average volume.