Eni SpA

Italian oil and gas company Eni SpA ( E) is showing a similarly bearish pattern right now, just in the much longer-term. Eni has been forming a head and shoulders top pattern since all the way back in September, signaling exhaustion among buyers.

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The head and shoulders pattern is one of the most popular price patterns -- and for good reason. It's formed by two swing highs that top out around the same level (the shoulders), separated by a bigger peak called the head; the sell signal comes on the breakdown below the pattern's "neckline" level, which is right at $44 for Eni. A drop below that $44 level would be a major sell signal for the stock.

I said that the head and shoulders was popular for a good reason; it's not just the funny name. 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 that would have been both statistically and economically significant." That's good reason to keep a very close eye on Eni in May.

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