Regardless of your fondness for or attachment to a particular security, it’s important that you learn to detect and, more important, respect a change in trend. Stocks very often top out while earnings still look good. Investors who wait for the earnings picture to dim before hitting the bid in the face of a stage 3 top or stage 4 decline often end up with a huge loss or at the very least give back much if not all of what they made on the upside. When topping signs start to appear after a long, extended price run, it’s time to take your profit and head for the exit.
