In my recently published book, “Short-Selling with the O’Neil Disciples: Turn to the Dark Side of Trading,” (John Wiley & Sons, April 2015), I discuss the short-sale set-up chart pattern known as the “Punchbowl of Death,” or “POD” as I like to refer to it in acronym form. Like the more classical and orthodox “Head & Shoulders” formation, the POD is simply another template, albeit a somewhat unorthodox one, that I use to identify potential short-sale targets in-the-making. What distinguishes the POD from other short-sale patterns is that it generally occurs in what we would consider a very “hot” stock that has a huge prior upside move, then breaks down sharply for 18-20 weeks or more, bottoms out, and then stages an equally sharp upside move of about the same duration. This move generally takes it right back up to the prior highs, at which point the stock becomes vulnerable to a sell-off.
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