MCP Update

Our last post on MCP from April 15th, MCP "Patience Pays?" seems to have given us the reason we had been seeing those long term accumulation signal. I doubt a 10-year deal with Siemens is something that happens overnight and I doubt it's something that stays utterly quiet, thus the longer term divergences.

However since then, we've had a pullback at resistance of what looks like a "W" base bottom.

 MCP daily chart hitting resistance at a "W" base breakout/resistance area.

This is the 60 min chart and leading positive divergence (a very strong signal on a strong chart/timeframe) at the second "W" base low and the trend since. I'd personally like to see a leading positive divegrence on this chart before I felt strongly and comfortable that it was ready to take on resistance and break out to stage 2 mark up.

However, there are some near term charts suggesting something is building, even if it may not be the breakout that I suspect MCP will eventually make to stage 2.

 MCP 3 min shows the negative divergence at resistance, the pullback and a flat range where we often see accumulation / distribution leading positive.

This has migrated over to the 5 min chart as well.

 The same negative at recent highs and a positive relative, almost leading divergence in the same area.

My gut feeling is that MCP will see a bounce back toward the resistance area and likely not breakout. The other scenario is that this divergence continues to build, continues to migrate to longer term timeframes and does make a break out move, the reason I lean more toward the first probability is the 1 min chart which tends to show timing signals.

1 min MCP.

Personally I'd feel best about a trade in MCP long "IF" there were a shakeout below $.70 level on high volume, a clear positive divegrence as that would give us an entry at lower risk, a better price and a stronger timing signal (head fake/shakeout).

I'll set price alerts for such a scenario, otherwise I'll keep monitoring the divergence and see if it builds more from here.