IOC Short Set-Up

I last updated the trade set up for IOC on 4/11 in this post.

Just to save some time, I'm going to post a few charts from that post as well as the commentary in Italics.

"This is the right shoulder of a large H&S top in IOC (see the last post for the target-somewhere around $10-$15 wow!). The ascending triangle is within that range in red."

"If I can't short a H&S at the top of the head or the right shoulder, then I wait for the neckline to be broken as you will almost always see a volatility stop run to take out new shorts with a move above the neckline, that's the last place I would short a H&S and the least favorable."

"IOC 10 min chart is a pretty serious timeframe and you can see as it has broken down below the triangle (any Technical traders paying attention would most likely short the break below the triangle), but there's a 3C positive divergence, it looks like they are going to squeeze the shorts. "

"The divergence has migrated to the 5 min chart (from to 5 to 10-good migration of the divergence) where you can see the negative divergence at a head fake breakout above local resistance that was sold in to sending IOC lower, which is the point of a head fake move, they give the reversal added momentum."

Now to today...

One of the reasons I like IOC so much is it's late in a stage 3 top, next comes the trending stage 4 decline. Even more, the price pattern implied target for IOC is about $10, with the article I linked above (which has a link called "How to make more than 100% on a short"), IOC as a pure equity short gives you advantages a short ETF cannot.

This is a 2-day chart showing the different stages of IOC's trend and now a "Slanting" neckline on a large Head and Shoulders top (ironic that we have been talking so much about slanting neck lines on H&S tops and bottoms), this is a large top. "A" is the left shoulder, "B" is the head, "C" is the right shoulder and it is at a good entry near the top of "C" in which we have been waiting to either add to this position or initiate new shorts for those interested.

 In side the right shoulder we have a bullish ascending triangle, the truth is it's too large to be a real consolidation pattern, but most traders don't care about the rules to verify if it fits with what they want to see. As mentioned above in an earlier post from this month, we saw a head fake break below the triangle which would bring in new shorts, then as we suspected long before it happened, the positive divergence told us that they'd be squeezed which as you can see today, they are. We wanted to enter IOC short above this price pattern and we are getting there, ALL head fake moves!

Here's the triangle within the context of the H&S top in the right shoulder, this is the second most ideal spot to enter the short (the first being the top of the head).

 As mentioned above in the last post, the 10-min 3C chart showed a positive divergence in to the break below the triangle so we knew weeks ago that this would be a short squeeze move, in addition the move today above the triangle's resistance is seeing a similar head fake move with a negative divergence on the move up, telling us smart money is selling/shorting IOC in to price strength, the same as what we want to do and have been waiting for.

 For now the 1 min chart is inline with price so I expect the upside move is not over, which is even better, a better entry, less risk, higher probabilities.

The 15 min chart also tells us this breakout is almost certain to fail, when the short term charts confirm, the timing will be excellent and we can make our move then.

This long term daily chart is really the final say on this H&S top and as you see, it's showing pure distribution in to it, so it is a trade we want to seriously consider.