Equidata Investor, The

In the chart of Entremed Corp. below, you will note the end of the accumulation stage at the close of the long triangle at point C at around $ 20.00 and the secondary accumulation triangle at point E (left shoulder) culminating at point D at around $ 30.00. This set up the explosive rise to point B (the head) or about $ 105 per share. Following point B is a sharp decline on profit taking as the syndicates and other insiders sell off their shares to the investing public. The move is temporarily halted at around $ 50.00 before a temporary recovery (short covering) takes the stock back to point F (the right shoulder) or about $ 70.00 per share. The recovery did not last however and the stock nose dived down to around $ 30.00 per share before recovering a second time at G. Following G the stock again plummets as indicated by point H ( exhaustion Gap) in a distribution phase and continues on down to around $ 18.00 by June of 2000.

It is evident that traders getting in at C made a substantial profit by getting out at E (left shoulder) but if they had been charting they would have known that the upward move was not over following point E as the stock went on up past the left shoulder E. Getting back in here would have netted the savvy investor another 45 points to around $ 105.00. This formation is a classic "Head and Shoulders Top" in a distribution phase. These formations also occur in low price stock movements and can be just as dramatic. Notice the trend lines B-F and G on the down slope was not broken on the upside, indicating further weakness.