% FROM 200-DAY MOVING AVERAGE
One of the stock market's paradoxes is that what seems too high goes higher and what seems too low goes lower. But there's a limit. Nothing goes up forever — even the best growth stocks.
Every experienced stock investor knows that at some point, what seems too high in price is in fact too high. So how do you objectively measure how high is too high?
One way is to calculate the distance from the 200-day moving average to the stock's current price on a daily chart. If the price is more than 70% to 100% above that level, maybe it's time to think about selling.
IBD founder and longtime former chair William O'Neil lists that as a sell signal in his book, "How to Make Money in Stocks," but admits he rarely uses it.
Use this script in your risk evaluation when starting a new position or thinking about selling a current position.
The percent from the 200-day moving average will be calculated and displayed in the top right of your chart. The flag symbols (⚑) will appear when a stock is >70% from its 200-day moving average line.
Every experienced stock investor knows that at some point, what seems too high in price is in fact too high. So how do you objectively measure how high is too high?
One way is to calculate the distance from the 200-day moving average to the stock's current price on a daily chart. If the price is more than 70% to 100% above that level, maybe it's time to think about selling.
IBD founder and longtime former chair William O'Neil lists that as a sell signal in his book, "How to Make Money in Stocks," but admits he rarely uses it.
Use this script in your risk evaluation when starting a new position or thinking about selling a current position.
The percent from the 200-day moving average will be calculated and displayed in the top right of your chart. The flag symbols (⚑) will appear when a stock is >70% from its 200-day moving average line.