IOC Update

If you stuck it out with me in IOC (long), I'm sure you are feeling much better now than a week ago, but we don't stay in these positions that are losing without a really good reason, IOC had several good reasons, now it has several even better reasons.

There was a really nice move today of over 4%, but more importantly, through a resistance area. I want to give you a feel for the probabilities and where there's likely going to be some turbulence, basically I'm trying to anchor expectations so when you see something a day or a few days from now you can think back and remember, "Oh yeah, we were expecting this and it should be fine". I find that anchoring expectations helps in keeping decisions more objective and less emotional.

IOC's daily chart shows a significant gap down on 12/06 with heavy volume. Many times these gaps down are or use to be known as "Exhaustion Gaps", they were/are useful in finding either a short or primary trend capitulation event which would be the event that ends a stage 4 decline, similar to the upside exhaustion gap that is a large move up with a small daily candle body and huge volume that often marks the end of an uptrend, stages 2 and 4 are very similar, except polar opposites, both are trends and both lead to stages 1 and 3 which are similar, but polar opposites as a base or a top.

The thing with a capitulation event in which all weak hands that intend on selling all sell at once is that traders can often enter too early as price tends to slide a bit lower before moving to a new phase.

 Here's the actual event. Never enter a trade just because you think it has moved too far in one direction, that's not a good reason to enter a position, there must be something more.

Luckily IOC has come alive, it has cut the initial losses we saw by two thirds or more and is now moving toward a gain.

 Like UNG  or more specifically DGAZ, we have a similar inverse H&S bottom, a slanting neckline like this does not invalidate the pattern, you see them all of the time, just in textbooks they cherry pick the best examples and people tend to overlook real patterns because in the real world, we get a text book pattern maybe 5% of the time. 1 is the left shoulder. 2 the head, 3 the right shoulder, 4 the neckline, 5 is initial resistance that was blown through today on a solid move and 6 is where we have overhead resistance that is likely to cause some volatility, but I think we'll make it through the area.

This 60 min chart's divergence is one reason I think we'll make it through the area.

The initial bottoming/basing process (as mentioned before) was broken, this is a type of head fake move as early longs get shaken out and if they don't have a good reason to stay, they move along, you see this 95% of the time with a primary trend capitulation event.

The 15 min chart shows accumulation at the head and right shoulder and a leading position so it looks good for a longer term uptrend. I would not be a buyer here as it's too far now from a natural stop, but there's a possibility of a new entry or an add-to entry coming up.

So I'd expect some resistance and volatility at the overhead resistance zone identified on the chart with the numbers (#6), but all in all I think there's a divergence large enough to blow right through it. If this were all we were going to get from IOC, then we likely wouldn't see anything beyond the 15 min positive that's in place.