IOC Charts-Trade Set Up ***

This is truly a beautiful short position for the long haul. My last major update that would explain enough of what we were waiting for to add to IOC which was already in the green as a short, would have been this one from Thursday, May 2nd 2013. There's a link at the top of that post that takes you back to an earlier, more comprehensive post, but one of the beautiful things about IOC is it has huge opportunity on the downside. The other thing I LOVE about IOC is it telegraphs its moves so well, we were patient with IOC waiting for it to break in to this area, we had signals that it would and it did.

*If you are new to the trade idea or considering it, please make sure you read the larger updates linked above.

First, IOC is a major H&S top and it is confirmed by volume analysis, it's not just a price pattern that looks like a H&S top. We entered near my favorite place to short a H&S and today was my second favorite place.

The Basics.. A Large H&S top of over a year.

 "A" is the left shoulder, "B" is the head, "C" is the right shoulder and what we have been waiting on and "D" is the neckline.

Looking at the right shoulder we noticed a while ago an ascending triangle which is a bullish continuation price pattern. For those who didn't look at the chart with a 5-day chart, they may have not noticed the larger H&S, however for those looking more closely, the run from the neckline to the top of "C" and then a bullish ascending triangle suggests IOC makes a new leg higher, it first made a head fake / shakeout move below the triangle (I always say head fake moves are some of our best timing signals), the next day the breakout of the triangle started. We already knew this would be a head fake / failed breakout, but we waited on it because short term charts were showing accumulation for a move higher.

The only move higher that will draw in more buyers and create the demand and volume Wall Street needs to sell or sell short (both are selling) in to would be a new high or rather a higher high so that's what we wanted to see, a higher high above the $82 area, today provided exactly that on earnings.

The intraday move is already showing good confirmation as a head fake move, but we could almost assume it was going to be when looking at the overall picture. Here you see accumulation for the move higher (I have no idea if earnings were leaked, I do think this had more to do with the set up though).

The red trendline is the area price needed to pass above and show distribution in to that move, we could have guessed at that by the long upper wick as higher prices were rejected today.

 The longer term chart pattern with distribution in to the head and then in to the right shoulder and today in to the move to the area we were looking for and waiting patiently for.

Note that as far as head fake moves go, IOC put in a nearly identical one at the top of the head (first yellow arrow) and another similar today.

With that price move to the exact area we have been patiently waiting for with distribution in to the move, this is now a high probability, VERY low risk, with an excellent entry-short position.

I hope those of you who have been following and building a position in IOC had a chance to look at it today. If we get some loitering around the area we'll check it for new positions if any one is interested.