With several weeks of rally under the market’s belt, it was susceptible to the disappointment doled out this week by central banks. 

To take advantage of the decline, I’m looking for sectors that lagged on the way up, as they tend to lead on the way down as well.

While the S&P 500 rallied from its September lows nearly all the way back up to its 52-week highs, the chemicals group only recovered about two-thirds of its summertime losses. And it now looks ready to roll over.

Within that group, PPG Industries (NYSE: PPG), a maker of protective and decorative coatings and glass products, sports a rather clear chart with all the hallmarks of a stock ready to break down. 

First, there was declining volume and, therefore, declining investor interest on the price rally. 

Second, the chart shows a bearish divergence in the Relative Strength Index (RSI). Even though price made a higher high in November versus October, this momentum indicator made a lower high. This suggests waning momentum, and such divergences are usually resolved in the direction of the indicator — down in this case. 

But there is more. Cumulative or on-balance volume also set a lower high, suggesting the flow of money into the stock is also waning. And finally, PPG stalled at its 200-day moving average. 

Basically, there is a body of technical evidence suggesting the bears are wresting control from the bulls. 

Even though the chart above suggests a short-term decline is ahead, it is always a good idea to check out a larger time frame. For that, a weekly chart can offer interesting insight so we know if the short-term condition is moving with or against the long-term trend.

The weekly chart shows a rather clear, albeit incomplete, head-and-shoulders formation. Keep in mind that patterns such as this one do not indicate anything until they are complete and price breaks from the pattern itself.

However, it does give us a nice framework for what might happen in coming weeks. A short-term decline would complete the right shoulder and set up a potential major top. This would tell us the short-term breakdown is in line with the development of the long-term pattern. 

With that said, I am not ready to be overly aggressive in expecting a decline all the way to support for the head-and-shoulders pattern around $86. Rather, I’m looking for a decline to short-term support from August in the $93 area. That also happens to be about a 61.8% Fibonacci retracement of the September-to-December rally. 

Recommended Trade Setup:

— Sell PPG short at the market price
— Set stop-loss at $108
— Set initial price target at $93 for a potential 11% gain in five weeks

Note: For traders looking for more, there is a simple strategy that could allow you to make a 105% profit on that 11% move by risking just over $1,000. To find out how, follow this link.

This article was originally published on ProfitableTrading.com: This Stock is Headed for a Double-Digit Drop — and Fast