MCP Update

I had an email question about whether I would add to MCO right here, my answer is no, although I do like how MCP is shaping up, it needs to mature a little more and give us the high probability signal that we want to add on, it is moving in that direction and I think MCP is another good example of what was addressed in last night's post and the previous post.

I'm as guilty as anyone in thinking the market should turn on positive signs, but it never seems to happen like that. Last weak we had 3 days of negative divergences in the SPY and I was starting to doubt if we'd even get a move down or we would just get a consolidation, I even explained in a post that it's not uncommon for divergences in the 1-2 min timeframe to cause consolidations through time rather than through price, but I had not seen that with a 10 min chart before, Friday all at once that divergence played out and I still haven't seen a 10 min divergence that causes only a consolidation through time. The point still being, reversals are a process and rarely an event, last week the SPY went lateral for a couple of days on a very negative 10 min chart before breaking down, it didn't move up, it just stayed in the range before making the reversal.

As for MCP, here's what I like and here's why I would not be in a rush, but show some more patience. Believe me, I know what it feels like to want to be actively doing something in the market to produce gains, but some our most successful trades have been more about waiting until it was clearly time to act, think about the core shorts like BIDU which was a process of several weeks, but paid off well or PCLN that was also something we expected to happen, waited for it to happen and then pulled the trigger and had another great trade that made good money short against the market's tide.

 Here's MCP's range before  reversal from up to down, it's rather short and tight, now we are starting to see a range develop in MCP again, this is where it is tempting to add or start a new position.

 Agin the Rate of Change in price dropped quickly from the lateral trade in MCP at the top to a move down, I cannot tell you how valuable ROC is as a tool to enhance other indicators or just to get a real perspective on market action rather than an emotional one.

 MCP 3 min went from upside confirmation to a negative divergence in the top' range to a positive divergence (leading) currently as this new range develops.

 The 3 min chart looks great, if the 5 and 10 min charts looked the same I'd probably add to MCP, it does take some time though for the divergence to migrate to longer timeframes and this is why the range is so important, this is where that happens. So this 5 min chart and the 10 min chart below are the reason I would not add quite yet.

All of the indications in MCp are looking good for a 5/10 and perhaps 15 min positive divergence that we want to add to, for me it's just not matured to that level yet.