This is the last question in the series. Please feel free to post any other investing questions you have and we’ll be happy to answer them.

Question: In a prior Cabot Wealth Advisory, you wrote that commodity stocks were dead, and should be sold.  How did you see that coming?  And what do you think of them now?

(Editor’s Note: This refers to the July 10, 2008 issue.)

Answer: One key sell rule you can use is this:  If a stock or group has had an extended run-up during the past two, three or more months, and then most stocks in the group suffer their biggest down day on their heaviest volume of the upmove, then the top is in.  This is especially true if most of the stocks in the group break below their 50-day moving averages.

Of course, this is all based on technical action, not fundamentals.  But it doesn’t matter.  I’ve seen it work many times in the past, and it worked again in early July of this year, as all the steel, coal, oil and natural gas stocks were crushed.  It was a sign that perception and sentiment in the group had switched–the big money crowd was jumping ship.

As for right now, I do believe many of these names can bounce, but I don’t advise playing the bounce.  Until I see signs of big-volume support, I would avoid all commodity stocks.  They may still be in a longer-term bull market, but to be honest, many of the stocks have suffered abnormal declines, which makes me wonder.