MCP Update

I'm sure you've seen a lot about MCP here whether you are in the position or not, but I will show just a few longer term charts just to give you a feel for where MCP is and where it would be in a large cycle (stage 1) and that to me, it's still in a REALLY attractive position as I really like this as a core LONG position (full size position).

The $4.70 Rubicon was crossed last week, that was pretty much the last thing we were looking for and it's now acting like I'd hope after taking out remaining $4.70 stops last week. In a way, this post is kind of for those who haven't paid attention to MCP until now and might want to consider it. For others, this is an update of where MCP is and finally even if you have no interest in MCP, there are some great concepts and examples of market behavior.

Just looking at the MCP chart it looks like a simple long, short trade and the short side looks really easy , like a no brainer.

These are the stages and trends of MCP, PUTTING YOURSELF IN THE EMOTIONS OF THE MOMENT (WHETHER LONG OR SHORT) IS ONE OF THE HARDEST THINGS TO DO, BUT GIVES YOU A REAL NOISE FOR THE MARKET.

MCP started at stage 2 Mark-up (2) however as I have mentioned many times, changes in character are important as they precede changes in trend, I just mentioned this Friday re: MSFT (when it was a momo stock) and AAPL recently before the top. At "A"  there's an uncharacteristic, nearly vertical price move, these are most often seen JUST BEFORE a stop tops so in actuality they are warnings or red flags, at least time to have a tight trailing stop. At "3"  we have a large triangle stage 3 Top.

At "C"  we have the break down from the top and then a 5 week bounce which was a +40% MOVE, try to put yourself in the emotional position of being short then.

At "D" we had a 5 month rally/consolidation, again just from a time perspective and after a 40% bounce, as a short this would be emotionally exhausting, but this is why it's important to know what is normal so you can anchor expectations and make fact based decisions rather than emotional ones.

At "4" we have a stage 4 Decline and at E  and F we have "Dual Capitulation". People always think after the first capitulation it's time to go long when in fact there are usually at least 2 capitulation events and then months or years to form the next stage 1 base so those going long on the "Blood in the streets" capitulation event are often at a loss for a long time or at least at Opportunity Cost.

 This is a closer look at Stage 1 in MCP, we have seen plenty of long term charts showing large positive divergences and especially recently after GS downgraded MCP, which means GS is probably the largest buyer of MCP in stage 1, it's smart money, NOT RETAIL.

 This is the $4.70 level we expected to be taken out and it was, note the volume as stops were hit so it was worthwhile for them to take out the $4.70 level, it provided: Supply and Cheap prices.

However, note what looks to be a final head fake/shakeout move (under the yellow trendline) and now a rounding bottom or at least lateral.

 A closer look intraday of Friday and today's tight intraday triangle with volume looking exactly as it should, this would be a textbook technical consolidation/continuation pattern, expected to breakout to the upside. I think it probably will as this is not yet attracting retail attention.

 I'll just use a couple of charts to show the longer term positive divergences in the base, note how much stronger the divergence is since price dropped and supply increased on the GS downgrade.

 This is a 15 min chart showing the same in the same area, but I really wanted to show you a closer view of the 15 min chart, but first give you context of where it sits and how it's leading positive.

This is an intraday/zoomed in view of the same chart, note the leading positive at the last dip below the yellow trendline above.

That's a strong 3C move in a short period of time.

 The 5 min chart shows the same thing, it is positive in to the break of $4.70, but even more so on the last dip.

The 3 min chart is showing the same thing, when I see something like this, I have high confidence that this is getting ready to breakout and eventually move to stage 2 mark up where the trend really cleans up and accelerates.

To me, this is the ideal area to enter, the risk is low as a stop can be placed not too far away and there's very high probabilities whether based on 3C or even just the normal 4-step cycle process or price pattern.

This may be the last good time to get involved with such favorable risk/reward dynamics, but that depends on your trading style, risk tolerance, etc. I love it!

Finally, THIS IS ANOTHER EXAMPLE OF HOW 3C PICKS UP THE NEXT TRADING DAY RIGHT WHERE IT LEFT OFF THE PREVIOUS DAY.

MCP was in a very tight range, typically we see accumulation in these ranges and there was a clear 3C divergence Friday, we'd expect MCP to move up from that leading positive divegrence as the market opened this week and what happens, it moves up and 3C/price are now (intraday) in confirmation.


I'll have MCP on the WL, but it's already a filled out long position.