MCP was a long idea, I'll have to dig back later and find the original idea as it is a more comprehensive post dealing with capitulation, a very clear support zone that was run on stops and those were accumulated and in general, the base-like nature of MCP and the idea of the trade which is a little longer term, not so much a day to day trade.
We've had some good trades that have returned between 25-55% (UNG depending on where you got in) and it hasn't even broke out of the base yet. If you reacted to every pullback and head fake move, you wouldn't have a decent gain in UNG.
MCP is similar, but I don't think it's a primary trend base, more like a sub-intermediate trend base so it won't be as big, but still it needs a little room which is why on initial trades, especially bases or tops that are volatile, I'd rather take fewer shares and have a wider stop to allow the trade space to develop.
MCP charts...
MCP has a few things on the daily chart, a bullish descending wedge and we know that they don't react like the textbooks say they do anymore, instead of a reversal to the upside as soon as the apex is reached, it has been common place 90% of the time for a lateral base or top for an ascending wedge, to take shape before the move comes. The numbers refer to the stages of a stock's life-cycle, stage 4 is decline, stage 1 is accumulation/base. I don't think MCP is going to have a base large enough to retrace the wedge's base at $70, but I think it's still a good risk/reward position. Also note the change in character not only in price, but volume, this is what alerted us to UNG long before it started basing and moving up.
As for the Trend Channel, it can't be used yet for a long stop because we don't have an uptrend, but a break above the $13.10 level on a close will totally end any lingering doubts about the downtrend and will likely put MCP in a better position to make a move higher.
Briefly, MCP saw initial capitualation and formed obvious support, that support was taken out and all/most who bought on capitulation were shaken out of the trade and gave their shares to institutional money on the cheap. Look at the volume on that move as support was taken pout on a stop fishing expedition, only to see MCP rise 29% in 3 days and over 50% a little longer term in September.
Here's confirmation of the downtrend at the green arrow on a 60 min chart, there are a few divergences in the trend, but mostly confirmation until a strong leading positive divergence in the white box on guess what day? Yes, the day the stops we ran, their shares were accumulated.
On the 30 min chart, here's the accumulation of the stopped shares with a leading positive divergence, we see a smaller negative divergence turning MCP back down as it needs time to create a base and smart money isn't chasing prices higher, they bring them back to them, we also have a 30 min positive divergence on another recent break of support.
The 10 min chart is sharper with more detail, here's the negative divergence to turn MCP back down to the range in which it can be accumulated at low prices, to the right a recent break below support and again a positive divergence in to the break lower, get it?
On the 5 min chart, this is the recent break of support close up, look at where the positive divergence takes off as prices move below the support/stop level.
The same can be seen on the 3 min chart
Intraday, this isn't a big deal, but we had some accumulation in to the open yesterday, prices ran up and saw a negative divergence in to today's open on a move that was too parabolic any way to sustain.
All in all, I still like MCP a lot as a long.
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