Here is quick update on the possible head & shoulders formation first observed on September 9th, that could soon be confirmed (or if it reverses). Now that a break through the neckline seems imminent, we can observe that BAC's volume has continually decreased since the start of the left shoulder to the right shoulder where we seem to be now, if the head & shoulders formation gets confirmed. This is an important criteria for the head & shoulders formation to occur, and now it seems more likely that it will happen.
"Volume is usually highest during the left shoulder formation. As prices slip back, volume recedes, when a second rally forms, volume is again high, the head of the pattern is formed when surging prices and volumes begin to ease and fall back again. The trough between the head and the right shoulder must be below the peak of the left shoulder for the pattern to be considered a head and shoulder pattern. The right shoulder is another rally in prices but typically volume is lower than the volume that created the left shoulder and the head. Once the head and shoulders formation is complete, a breakout down through the neckline can be a good indication that the trend of prices will continue in the direction of the breakout." (source: http://www.trade10.com/Head_Shoulders.html)
Once BAC breaks down below $16.50, we should be able to confirm the head & shoulders formation. But to play it even safer,would be to wait to see BAC fall below $15.50.
Short BAC @ $16.96 - Stop Loss: $18.02
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