Don't Ignore This Chart!

Ticker Cloud leads to SDS Head and Shoulders

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Ditc20090409 Click here for a live version of this chart


SDS is the ProShares Ultra Short S&P 500 ETF.  It's a way to invest (gamble really) that the market is going to fall.  It showed up today on our Ticker Cloud page as one of today's most popular charts.  A close look at the chart shows why.

Prior to September of last year, SDS was in a pretty nice uptrend (something that's bad for the overall market obviously).  Then, as we know, the markets went nuts and so did SDS.  Since January however, the markets have gotten better organized with fewer huge jumps - just like SDS.

What's interesting is that if you mentally remove what I'm calling the "Land of Strange Behavior" from the chart, you are left with a pretty classic Head and Shoulders top pattern - the uptrend from last summer, followed by the left shoulder in January, the head in early March and the possible right shoulder at the start of April.

Today's gap down hints at a possible break below the neckline.

Obviously, selectively ignoring parts of a chart is "cheating" when it comes to pure technical analysis.  But with this chart, I'm more interested in the psychology of the bears and right now, what this chart is saying is that the bears are nervous.

Regardless, SDS will be very interesting to watch over the next couple of hours/days.  And be sure to check out the cloud from time to time to see what others are charting.

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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