MCP Follow Up

I'll get to the market in just a few minutes, but just like the sun comes up in the morning, look at EUR/JPY and look at ES, not much more has to be said about that which is why I thought it important last night to address the issue. 

It seems someone with a decent grasp on currencies has a fairly big edge over someone with MACD and Stochastics on their chart. Basically the EUR's downside ROC has slowed while the Yen's has increased, almost like a capitulation move down so it may end soon, we'll keep an eye on it, but if we get more/wider chop, I suspect a lot comes from this pair.


As for MCP, the last update was Monday 10/28 (this week) which came after our last trade there for  a +38 and +58% return, but as it says at the top of the post...

"MCP has been looking like a large, long term base, but on October 4th after looking for a pullback that we got,  I had written,

"I don't or didn't feel strong about the action in underlying trade when the pullback took place yesterday so I didn't open a new position... This is the 5 min MCP chart, this is what I wasn't too excited about yesterday, it just seemed like MCP needed some more time to gather strength so I skipped the trade...  So far intraday we don't have the kind of support MCP needs to sustain a move higher so I'll set some alerts for a shallow consolidation and look to see if this situation has improved which may offer that SCBO." 

You may also recall Goldman Sachs has a sell signal on MCP and you know what that most likely means, Goldman is buying every share of MCP they can get their hands on. 

So here's what MCP looks like today as I do like this as a trading stock either with or without leverage.

 This looks to be the longer term MCP base, a large ascending triangle, but not in the consolidation/continuation configuration, it's too big and trends are all wrong, in the "Bottom/base" configuration so a head fake move just before the completion to knock out weak hands followed by a Goldman Sell Signal looks to me to be very high probability signals of the signs of a base wrapping up and perhaps getting ready to make a move to stage 2 mark up which would be a amazing move in MCP.

The shakeout on its own is exciting at this stage, add GS and it's almost irresistible, almost... As always, there needs to be a high level of confirmation among multiple timeframes, I'll show you what we have.

This is the "Trend Version" of 3C, not much detail, but a clear trend and it's perfect, negative at the formation of the triangle's apex and price follows down and a positive divegrence just where you'd expect accumulation of stopped out shares and cheap prices.

60 min.

 This is the 30 min with more detail, note an increase right at the GS sell signal and break under support, exactly what we'd want to see in this case.

 The regular 3C version for MCP is on board too with a leading positive divergence (the strongest kind) right at the area where they, you or I would consider cheap and low risk, plus the volume on the break lower shook out weak hands so there where quite a few shares up for grabs, that's the size they need.

Why no one ever wonders about who took the other side of that kind of trade is beyond me, it's the fastest, easiest, cheapest way to accumulate in size without raising any suspicions, it's just common sense, what happened to using your head in reading a chart?

 The intraday timeframes are the key to unlocking the longer term (strategic & tactical, we need them both in line).

So this 5 min chart is good to see, but I think it will show an even more extreme (vertical-ish) positive before its ready to go.

 The intraday 2 min shows some movement and a little launch, this isn't enough for me to buy yet, at least not a full size position.

And the 1 min shows intraday distribution at the congestion highs of that move so I suspect it will come down a little more and really put together a strong positive before it's ready to go.

As far as how far along in the process it likely is...

I'm impatient, a lot of traders are, but that doesn't change the fact that 95% of reversals are a process, not an event (which is the difference between a "V" price pattern up and a "U" or "W"), most of the time the wider the base, the stronger the move.

I'm guessing we are about halfway through this process, the GS move could be considered a head fake, it did what they wanted, but typically that final "pre-lift-off" shakeout is more acute.

A couple of things you may want to watch: check out the 60 min Wilder's RSI 14 (w/ Wilder's smoothing), it is positively divergent and improving, I'd like to see it above 50, also a clear cross of the 10-bar 60 min m.a. over a 22 or 20 bar 60 min m.a. and if you're not good at eyeballing it, throw a ROC on price as well (Rate of Change). Sometimes a charting software program won't allow you to add it to price so put a 1-bar moving average on price, make it invisible and add ROC to the 1-bar m.a., it's exactly the same as price and watch for positive divergences.

Truth be told other than a head fake move that is more acute, I don't see any reason I'd be very nervous about starting a position here, phasing in and adding if we get a head fake move, but this is phasing in NOT DOLLAR COPST AVERAGING, the difference is one is planned, the other is throwing good money after bad so you MUST make that part of your risk management plan before you enter SHARE ONE.

I think MCP will make a move soon, it has showed its ability to run counter to the market which is somewhat rare.