MCP Follow Up

The last update for MCP was Friday, Nov. 1

After having had a Goldman Sachs sell rec'd and breaking below local support and seeing positive divergences on that break, it looks very much to me like GS is up to their normal game of doing the opposite of what their saying and why not, that's how they create the supply they need at favorable prices.

My feeling was that the current rounding in MCP was/is a reversal process and that it was likely about halfway through it. *Please see the last updates which are linked above and a previous update is linked within the post above.

Here's the current update and I just keep liking MCP more and more.

 You'd do well to look at a 5-day chart, but draw in this ascending triangle base-like area first on a daily chart and you really get a feel for the transition of the stages and the high likelihood of this being a strong Stage 1 base. The drop below the triangle's apex could cause you to re-draw the trendlines and you'd still have a large rectangle which is also a common base/top pattern. In fact rectangles (usually shorter term and tighter ranges) are where we most often see underlying accumulation or distribution activity, if you think about how and why a market maker or specialist would want to fill an order in such a flat range, you get a better idea of why we see them in such an environment so often.

Also note the dip below support on the GS sell signal. I believe it has been something like 7 or 8 consecutive trades that worked out by doing the opposite of what GS puts out, even to their own clients!

 Here's that break lower and when GS made their sell rec'd and the uptick in volume which is generally one of the reasons they'd do such and it's also the same reason we see head fake moves which is all MCP is really missing to make it an outstanding long and timely.

 The 60 min chart should give you a good feel for the distribution in the ascending triangle to send prices to a lower level to be accumulated which it seems they were in some size, as price went back up and out of the accumulation zone we got a big break to the downside and again this is often seen toward the end of an accumulation zone, it's like a last chance to pick up shares from weak hands on the cheap and in size which is what Wall St. firms need, size, supply.

The break has the strongest divegrence of the entire base area which only validates what we'd expect to see on such a move in a mature base.

 The 30 min chart shows the same activity, positive divergences at the lows of the range and the strongest leading positive at the break to the lowest end of the range.

 Closer to the near term, the 5 min chart shows a clear uptick in the strength of the positive divegrence AFTER GS's sell signal when prices dip and there's an uptick in volume.

I didn't even want to draw on this 2 min chart because it's so beautiful and again, right where GS first made their sell call.

The only thing missing is a 1 min chart, but I wouldn't expect to see that until/unless we had a head fake move which is seen in about 80% of all reversals, look carefully and you'll almost always see it, a false break out or failed breakout, a false breakdown or failed break down.

$4.91 or actually under $4.91 is the first area I'd expect to see such a head fake move, the second possible area is under $4.88 as that is long term support.

I don't think I'd have a problem with a phased in entry LONG in MCP as long as it is part of my risk management plan BEFORE I enter the position, that means it would need an extra wide stop to accommodate for a possible head fake where I'd make sure there's 3C confirmation of a head fake on the 1 min chart and the others, BUT SINCE THERE ARE ALREADY SO MANY POSITIVES IN PLACE, THE PROBABILITY OF A HEAD FAKE MOVE BEING CONFIRMED IS EXTREMELY HIGH. 

The best reason for confirmation at this point would be simple timing and adding the rest of the position at the most favorable price possible, while still having exposure to MCP long as that large gap down out of the triangle could very well be considered a larger head fake move.

I may enter MCP on a partial position basis, but the position I'd likely enter would be a full size core long rather than a trading position. You might feel better about phasing in with a smaller trading position. I'll set price alerts for the levels mentioned above and will be considering entering a partial position (long), IT'S THAT 2 MIN CHART'S 3C MOVES THAT ARE REALLY GRABBING MY ATTENTION AS WE HAVE BEEN WAITING ON MCP AS A NICE LONG ENTRY PATIENTLY.