MCP "Patience Pays?"

I've probably sickened you to death with the Jesse Livermore quotes, if you don't know who Jesse Livermore is, I highly recommend going out and getting the book or e-book, there are a couple, "Reminiscences Of A Stock Operator", "Jesse Livermore: World's Greatest Stock Trader" and several more. The man who traded the early 20th century, a self-made multi-millionaire who started as a runner in a stock bucket shop and turned in to one of the greatest traders we have ever seen.

In any case, I may have bored you to death with the same quotes and messages over and over again, but the point is simple, truth is true no matter where it's found and in today's world, today's market it's easy to get "Lost in the lines". I don't regret posting the quotes until the point in which you want to send me hate mail, at some point in your trading career, they'll take on a new meaning for you, just like reading a book and getting one message from it, but after some life experience over a few years and reading the same book and you get a whole new message-especially true of religious/spiritual texts.

To paraphrase the main theme of many of the quotes, "I never made millions in the market because I was smarter than anyone else, there were a lot of traders who were right on the market as I was. It was always the sitting that made me the big bucks. It's a very rare thing for a trader to be right and have the ability to sit tight".

In other words, although that's probably a horrible paraphrase of multiple quotes, a lot of people saw the same thing he did, he just had the courage of his conviction as opposed to the others who were run out of their trades by emotions and all kinds of other market tricks.

I mention this specifically because no matter how hard Seeking Alpha tried to drive MCP out of business as their contributors were often short MCP on the hit pieces they'd write, there has always been a very strong underlying trend in MCP telling us that someone has known something about MCP that should at some point send the stock much higher if they were willing to stick with it over its sharp drawdown and continue accumulating it at lower and lower prices. 

I know some of you have held tight to MCP and today I say congratulations as MCP is up well over +50%. 

 MCP up about + 55% today alone with no leverage.

There's a "W" bottom as you can see, a price pattern/concept that we see on daily charts, weekly charts or 1 min charts. Note the volume near the "W" base lows as well and today's break-away gap volume, BEAUTIFUL-AGAIN WELL DESERVED CONGRATULATIONS are in order for those who stuck with MCP.

THE NEWS...
Molycorp Chosen to Supply Rare Earths for Use in High-Efficiency Siemens Wind Turbine Generators

This is a 10-year deal, the probability of additional follow-oon deals is high, so the company that SEEKING ALPHA has been trying to drive pout of business as their short MCP contributors have been at it for well over a year, has just broken their collective jaws this morning.

There's not wit or sage market advice that just simply says "Stay in a stock and you'll be rewarded", that's not what Jesse Livermore was saying, it was the ability to BOTH be RIGHT and SIT TIGHT, were rare traits for traders.

Why would we assume we were right about MCP long term? Like everything else in the market unless you are breaking the law, it's probabilities which differs greatly from gambling.

These have been the probabilities that have kept faith in MCP alive for all tis time.

As I often say, 3C can show us the underlying activity in the stock, but the reasons why won't be known until the chance to make money has already passed, this morning we find out what this was likely about, or perhaps there's even more to come.

This is a weekly leading positive divergence with a specific leading positive divergence at the "W" bottom lows.

This is FAR from the only long term chart that has been suggesting someone knew something about MCP and what they had cooking on the fire.

Again, I have been pushing the importance of volume analysis as it is a lost art, but one that will serve you well in so many ways. Just look at this 3-day chart of MCP and the "W" base lows and volume and note the increasing volume on the move to the upside to the far right, EXACTLY as is should be.

What I find truly exciting for MCP longs is that this "W" base is just that, a stage 1 base that hasn't even broken out yet or moved to stage 2 mark-up!!!

As for those who are in or would like to get in, I of course would not chase MCP here if you weren't already in, but lets lay down an update and base of analysis that we can move forward from, whether it's trade management or new or add-to positions.

Again, the long term charts like this long term 4 hour 3C MCP chart shows a clear positive divegrence at its base as well as the longer term charts above showing a much larger overall divergence, this tells me something about the suspected upside target we'll get to.

 This is the "W" base on a 4 hour chart, the divergence here should be obvious,

However it has been a long term divergence, I can't get any more history out of this 60 min chart, but you can see where it started leading.

Based on the 3C concept of divergence reversals almost always surpass the area where the divergence was first seen (although there are several charts we could use for that purpose), using this 60 min chart would suggest a move through the $8.00 level which would make MCP an attractive long position even if you weren't already in it.

As for the price-pattern implied target of the base, the upside would be at least $2.00, but I suspect that this would be very conservative over the long-haul. 

 The 10 min chart is not fast enough to catch up with this morning's now 67% move to the upside, but shortly it will and these intermediate charts will be helpful in discovering pullback areas and confirming them as pullback entries or for those who want to trade around swings.

Note the yellow arrow which I use to point out head fake moves ( a stop run here).

 The 5 min chart is showing PERFECT upside confirmation so far which is a strong signal for the move.

On a more detailed 2 min chart, it looks like accumulation by middlemen/Specialists as it's probable they were building inventory ahead of the known deal announcement. The chart is also in line and confirming this morning's price move.

The 1 min chart shows the same kind of activity, usually market makers/specialists and also good overall upside confirmation.

If using the X-OVer Screen for management, you'd need to wait for the 3rd signal to go long, the custom indicator in the middle window above its 22-bar moving average (blue) on a 3-day chart. The first pullback should be to the yellow 10-bar (3-day) moving average or thereabouts. Subsequent pullbacks likely AFTER a breakout from the "W" base will likely come down to the 3-day blue 22-bar moving average.

The chart shows the last sell signal and a false whipsaw in the price moving average in orange which is why we use this system, to root out false whipsaw price moving average noise and keep to the trend,

Speaking of which...

For now, I'd use the 3-day Trend Channel for stop management. It stopped out the downtrend at the yellow area, but it's yet to move to a long trend as the channel needs to turn up, which it should do with little trouble, we can adjust the width of the stop after that according to preference, but for the longer term trend, for now I;'d stick with the 3-day Trend Channel.

Again, congratulations to MCP longs for today, you've earned it.