The sole bearish setup we're looking at today is Coca Cola (KO). Yes, Coke has been trending higher for all of 2012, but along the way it's been forming a well known reversal pattern: the head and shoulders. Essentially, the head and shoulders pattern is formed by three swing highs in a stock. The outside two, the shoulders, come in at approximately the same level, and they're separated by the head, a higher peak in the pattern.
The head and shoulders indicates exhaustion among buyers, and tends to be a very reliable setup in spite of (or maybe because of) its popularity: a recent academic study conducted by the
Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits
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