the QCOM h&s neckline is drawn from Apr,may,july 2016 lows to feb,apr 2017 lows….with the mother of all island heads (gaps on each side). also from mid 2015 to mid 2016 there was a massive inverse h&s in the small caps (iwm) which technicians thought couldn’t possible be because they called in a top with those same indicators. if you look at IWM now you see that inverse H&S and how it fooled all of them. shorts piled in thinking it was a top and they been trampling over eachother to get out ever since.

I’ve tried to find the H&S pattern that you are referring to but don’t see it. My best guess is that you are possibly referring to the late May ’16 highs as the LS, the late Oct ’16 high as the Head & the March ’17 highs as the RS? If so, I see a couple of issues that would invalidate or at least not confirm that pattern”

First & most importantly, Head & Shoulders patterns are topping/reversal patterns that come after a prolonged uptrend. That fact that QCOM peaked back in mid-2014 & fell into Feb 2016, where that H&S started forming shortly afterward that initial rally invalidates the pattern IMO. Also, the symmetry of the pattern is not ideal with both shoulders being very small in relation to the head. With that being said, this trade serves as a both a potential hedge to a short on the semis as well as a pure-play long with a downside risk (loss) of only 1.50 or less that 3% if stopped out (not factoring in the downward beta-adjustment) & with the strong potential divergences forming, I can easily see the stock playing out for at least a relatively quick 11% gain (& quite possible more if that large Jan gap is back-filled) as long as the semis don’t completely meltdown before then, something along these lines…