MCP Charts

First there's the long term equity long position, that's one issue and quite separately is the option positions, the last one we opened was on June 3rd after waiting most of the day for MCP to break under $2.50 as it was trading around $2.54 to $2.57 most of the day. The $2.50 level is where the stops were going to be and toward the late afternoon, $2.50 was broken, volume shot up as stops were hit which creates a lot of supply at cheap levels and doesn't draw any attention as someone has to be on the other side of the trade, but few people ever think about who. The next day we had a 12+% gain from the sub-$2.50 entry and the calls were at a double digit gain, I believe somewhere around 40% on the day which were also closed that same day.

For some newer members we had a similar trade in RIMM where the long term 3C charts looked great, but RIMMs price crashed after earnings, although the long term 3C charts continued to look great, we didn't know why, but held the position so long as the long term charts held up as they are the highest probability resolution and heaviest underlying flow of funds. It turned out RIMM later (2 months or so) underwent a massive management shakeup in which the two long term dual CEOs left the company and there was a lot of management changes made, RIMM shot up well beyond our original entry which had been at a substantial loss for several months and the trade ended with a double digit gain on an equity long with no options leverage. MCP has very similar characteristics, however the recent declines of the last few days have all been the day after a "Seeking Alpha" article knocking MCP as they need financing, ironically one article put a $1.60 price tag on MCP, right near where it is today. The point being, smart money knows a lot more about MCP than Seeking Alpha, I suspect smart money knows something about a financing deal as one of their competitors recently got one, actually the day after we entered the last call position so someone knew in advance and MCP moved up in sympathy with the competitor. As such I suspect it has been largely retail selling MCP  and there was just what looked like a volume/capitulation event which opens up massive supply at very low levels. There's also a lot of volume in the August $2.00 calls today, double that of the puts.

As for the charts, I noticed something strange. While the longer term charts that are more appropriate for the equity longer term trade have held up, I won't enter a call position unless the short term (timing) charts go positive, but I saw some unusual activity in indicators that I wouldn't expect to see it in.

 Longer term 30 min chart has held up, the area in the white box is the last call trade we opened as MCP crossed below the psychological level of $2,50 where retail traders had amassed their stops, the next day MCP was up nearly +12%, our positions even more.

 Longer term 60 min chart has continued to hold up, all of the recent downside has come from Seeking Alpha articles released after market the day before.

Here's the volume event I mentioned, it looks like some sort of short or medium term capitulation, a selling climax, but that also creates a lot of supply at very inexpensive levels which makes it very easy for smart money to pick it up without attracting attention, it almost makes me wonder about the integrity of the "Seeking Alpha" articles. We know Cramer pulls fast ones all the time for Goldman Sachs on his CNBC show which I never watch (Cramer or CNBC).

Don Worden is the father of modern money-flow indicators, he didn't getI believe,   credit because he didn't publish his tick volume unlike someone else who did get credit for OBV, Don was selling his to Wall St. and thus couldn't publish. This is one of Don's last creations, MoneyStream which I love as a macro indicator, but it usually is not the best for intraday work, however it just went nuts today as you see on the 1 min chart...

MS 1 min MCP

The same concept of migration for 3C holds true for MS as well...

 Here's MS on a 5 min chart and it is a bit better about its levels and price targets so MS at $2.40 is a pretty good approximation of an upside target.

And it has migrated all the way to a 10-min chart today alone.

 One of his other creations is TSV which is related to 3C as they both use the same proprietary data, however Worden averages there which looks like a messy chop stew of 1's and 0's as a raw data feed. As I said, they derive a trend through moving averages of the data which you can see below (white) is a positive divegrence. I use a different method as you always lose data whenever you average it and accumulation and distribution take place so fast, it's easy to average an important signal right out, however in this case it looks like TSV has a jump on 3C intraday which is quite uncommon.

 intraday 3C 2 min (small scale distribution) was picked up in the red box before prices moved lower again, but look at the activity in TSV.

On the longer, more important 3 min chart 3C is in a positive divegrence as is TSV which is starting to lead as well

 And where it really counts, the 5 min chart which is the minimum timeframe that must have a divergence for me to take a trade, never fell apart which tends to confirm my view that all of the recent selling has been retail as I have even seen on StockTwits with a guy selling 70k shares and his ledger proving it which is a bit uncommon, but the point once again is smart money has much better information than Seeking Alpha, I seriously doubt they'd be sellers on a Seeking Alpha article and certainly not in to lower prices.

Beyond that, the 5 min 3C chart is where we see institutional activity being (1-3 min charts typically more market maker/specialist stuff), it never deteriorated.

And the 10 min chart (I showed the longer charts at the top) which also never deteriorated or lost the divegrence. The only concern I have is how tight any reversal would be here, that's why I chose August as there's almost always a reversal process rather than event which would be a "V" shaped reversal, but who knows in this case.