IBM Follow Up

Since starting a short position in IBM (about 1/3 of a normal size position so that I can add on price strength, underlying 3C weakness), the position in only down -0.24%, about a quarter of a percent. I still haven't quite seen the move that I'd like to add in to, but we may be coming close and the underlying action remains encouraging.

 This is Don Worden's Moneystream, I have profound respect for the man as he was the first to create money flow indicators, everything that followed from OBV to MoneyFlow all originated with his work on Tick Volume which he sold to Wall Street decades ago. Although MoneyStream gives reliable signals, they tend to be short on details and not well suited for intraday timeframes, but we can see a double top in IBM's price action with a leading negative MoneyStream signal (red box) that is also relative negative between the two tops (red arrow). I like to use MS once in a while to confirm what I'm seeing in 3C.

 Here's the double top-not textbook, but they never are. In Technical Analysis a well formed double top sees a lower second top than the first, that's nearly 100 years old and gets manipulated by Wall St. as technical traders do the same thing they've been doing for 100 years with patterns like this. The more common double top, like the double bottom sees a false breakout on the second top that creates a bull trap. There are reasons for this such as the breakout opening up supply which can be shorted by institutional money in size without raising any suspicions and they can do it at a better price. Also when the top fails, the bulls who are trapped at a loss start selling adding o supply and downside momentum, this is why head fake moves have so much momentum initially as they snowball.

There was a perfectly formed Bull Flag in September so I expected that to break to the upside and now we are lingering at the top's resistance, a break above on continued negative signals is where I'd like to add, the same way we entered all of the core short positions.

 On a 30 min chart since the breakout from the bull flag, another bullish price pattern has formed, it's sort of like a bull flag, except instead of a flag, it's more of a bullish ascending triangle, a break above this is where I'm interested in adding to IBM.

 On a shorter term 2 min chart, the trend of 3C during the formation of this bullish price pattern has been a leading negative divergence, some traders will buy the price pattern in anticipation, but most will wait for confirmation of a breakout.

 The 3 min chart has a bit more history and the trend there is negative at the flag portion of the daily bull flag seen at the dates of the white box, the more recent ascending triangle is seen at the dates of the yellow box and again we have a leading negative divergence during the formation of the price pattern.

 The 15 min chart shows the entire first bull flag as it went leading negative at the flag portion and has gone deeper leading negative at the recent triangle.

The 60 min chart probably shows the trend the best and is the most influential of these charts except maybe the daily, IBM was trading in line or with 3C confirmation as it moved up until the bull flag was formed, that's the first place it went negative and leading negative. At the second smaller price pattern in effect now, the indicator has dropped to a new leading negative low.

I'd set some price alerts for a break out to the upside as it can happen quickly, I'll double check to see everything is still negative and look for the entry/add to.