What better stock could there be other than the Toronto Stock Exchange itself. This used to be a little club of sorts that only went public in 2003. In late 2008 it peaks at about $56.50 , a fivefold + increase over a similar number of years (remember that in 2003 stock markets were quite depressed having dropped precipitously as a result of the tech meltdown). Then it drops to about $20 (very close to 61.8%) and starts a rebound which, so far at least has all the earmarks of a well formed B-wave that will soon retrace 61.8% (at $40) once again. By that time the c will , more or less,  be vector equal to the a within this B wave. The move after that will be the C wave of the larger correction and if it does what these waves so often do, it will equal the A and that would bring the stock to about $10. Not the end of the world by any means , just an 8/9 year round trip. but why go if you do not have to?

How to decide whether to buy or sell ? Use all you have, start with gut feel or intuition AND use all the tools the world of investing offers. Here is a good example in the form of US Steel or X, shown below.

This stock trades around $20 for about the length of this chart and probable more; in fact it is basically down hill for many years dying with the rest of the US rustbelt under the weight of mismanagement, inefficiency, union demands etc. etc. All of a sudden the China factor comes out of nowhere in early 2003, presumable because the population there had grown from 1.4 billion to 1.400.000.001 causing the proverbial “tipping point” to occur.  Voila, in a mere 4 years this sleeper increases in value by a factor of 10. Our maestro Greenspan would certainly not have recognized the small bubble forming –BUT ANY SANE PERSON WITH A GUT WOULD AT LEAST BE AMAZED .

It drops even faster than the financials following EW rules to a tee. Also observe that the RSI,  relative strength indicator WARNS every single time that something is about to happen. It did again a few weeks ago and today the stock got hammered more than 10%. these indicators are worth paying attention to.

Is any of this predictable? Absolutely not ,  but is there a good reason to sit on a 10-bagger without a trailing stop-loss? Absolutely not. Unfortunately this is the part of “buy low sell high” that is most often not understood or practiced. It takes away 1/2 of the potential!