IOC Follow Up

Wednesday April 3rd I posted, "IOC Possible Short Entry" even though most of us entered somewhere around the $75.76 area, it doesn't seem wise to add to a short at a lower level, but this is one of the key differences and advantages of a pure equity short over an ETF (except leveraged of course", it's in the concept I published years ago and linked at www.Trade-Guild.net under "Resources and Concepts", "Making More Than 100% on a Short"  which is in response to the old cliches about short selling, "unlimited risk, can't make more than 100% because the stock can only go to zero, etc".

I'll leave the basic set up and bigger picture of the IOC trade to the last update linked above, this is just an update on a tactical entry, not the strategic view.

 This is the right shoulder of a large H&S top in IOC (see the last post for the target-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. Whether they just run up to the triangle's apex or pull a Crazy Ivan and run the down side first and the the upside before returning down is hard to say, but I favor the Crazy Ivan and a move above the triangle and I'll show you why.

 Intraday the 3 min chart is seeing a large leading positive divergence, this is what you expect to see on a healthy pullback or in this case, a short trade getting ready to be squeezed.

 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.

This 30 min chart is why I favor a move above the triangle (>$77.50)  as the 30 min clearly shows the negative divergence sending IOC below the triangle's support, but once below we have a positive divergence that has run through just about every time frame. So if I add to IOC, I want to add above $78.