After a stock breaks out, it is imperative to continue monitoring its daily and weekly price and volume patterns for any possible ailments that may develop.  Every so often, there are a few ominous technical signals that emerge. Prudent investors have learned to identify them due to the fact that they tend to lead to lower prices. One of these disconcerting technical signals is called a negative reversal.

A negative reversal occurs when a stock opens up the session heading higher but then reverses and ultimately closes lower. Reversals are often considered more severe if the stock's initial gains lift it to a new high, but it then reverses and closes for a loss on heavier than average volume and ends near the session's utmost lows. Negative reversals can occur on a daily, weekly and monthly chart. In general, the longer the time frame involved, the more concern is prompted by the severity of the reversal. Volume is directly correlated with the severity as well.   

Celanese Corp. (CE -$0.78 or -1.68% to $47.14) gave back earlier gains for new all-time highs and negatively reversed, closing near the lower extreme of its intra-day range as volume swelled. Typically, it is not a healthy sign to see such a reversal. Therefore, it is of the utmost importance for the bulls to quickly show up and quell the bearish action. The company increased its earnings in the latest quarter by +38% while sales jumped +19% versus the same period in the previous year. CE sports strong ranks; an Earnings Per Share (EPS) rating of 96, and a Relative Strength (RS) rating of 92.  The number of top-rated funds owning an interest rose from 183 in Jun '07 to 233 in Mar '08, which shows increasing institutional demand (the I criteria). Concerns would be raised by any weakness leading to a close under its old chart highs near the $44-45 area which would have the effect of technically negating its latest breakout. Always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that from your purchase price.