The bearish HEAD AND SHOULDERS pattern is often talked about, but seldom seen. It is a variation of the rounded top, but it has three distinct tops -- the highest top in the middle (head) and lower tops (shoulders) on either side of the head. We have not shown volume here, but ideally volume peaks under each top should be highest under the left shoulder and lowest under the right shoulder.

The "neckline" is drawn under the two bottoms that separate the head from the shoulders. A SELL Signal is given when the neckline is penetrated downward. From that point the estimated downside target is equal to the distance between the top of the head and the neckline.

In late 1994 SNPL became a buyout target with an offering price of about $14, indicating the excess of overvalue ($32) to which investors in a buying frenzy had driven the stock.