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Once you have determined the optimal time to buy a stock, the next step is to figure out when to sell. Depending on your investment strategy, sell signals can help you decide when to exit a position if you are not planning to hold for the long term. Below are five sell signals commonly used in the U.S. market that even non-experts can utilize.

• High Relative Strength Index (RSI):
  The RSI is an indicator that measures the speed and magnitude of price movements. An RSI chart often displays upward and downward triangles that indicate whether a stock is overbought or oversold. When the RSI exceeds 80, it typically signals an overbought condition, which may be an appropriate time to sell.

• High Price-to-Earnings (P/E) Ratio:
  The P/E ratio is calculated by dividing the stock’s price by its earnings per share (EPS), which is typically reported each quarter. A high P/E ratio compared to the industry average suggests that a stock may be overpriced, serving as a sell signal for many investors.

• High Short Interest Ratio:
  Hedge funds and institutional investors often bet on a stock’s decline by shorting it. The short interest ratio indicates the proportion of shares that are being shorted. A high short interest ratio (for example, 10–20%) means that many investors expect the stock price to fall, and in appropriate situations, this can serve as a sell signal.

• Debt Signals:
  Debt signals are useful tools in stock analysis. Analysts examine a company’s current debt and its plans for managing that debt to forecast future performance. While extreme examples like China’s Evergrande Group, which carries over $300 billion in debt, are rare, many companies have much lower debt levels. Keep a close watch on company announcements to understand what their debt decisions imply. Taking on new debt at low interest rates can signal growth opportunities; however, restructuring, delayed payments, or even bankruptcy filings may serve as sell signals.

• Negative Investor Sentiment:
  Although it is difficult, and sometimes impossible, to quantify overall market sentiment, bad news such as executive scandals, antitrust investigations, or dismal earnings reports can be warning signs for a stock. Investors generally react quickly to this type of news, so it’s important to stay connected. Setting up alerts on search engines for a company’s name can help you respond immediately when necessary.