MCP Trade Follow Up

There's a fair chance MCP bounces near term, likely later today, however this should be a short term bounce. I don't think the trade makes much sense without leverage which means call options, but it may make some sense if you have the ability to watch over it and act quickly.

MCP tends to trade on its own, meaning it's not subject (as most stocks are) to the, "Rising tide lifts all boats" market influence or gravitational pull. So even though we are expecting a market bounce, a MCP bounce would likely be a separate event that is unrelated to the magnetic pull of the market, which also means any move to the upside may be significantly shorter in duration.

While this is looking higher and higher probability, it is still a small move and thus is a very speculative trade.

 The main short term theme in MCP has been and still is a pullback. I'm not interested in trying to trade the pullback as MCP is otherwise a very strong stock and I'm not betting against probabilities.

For most people, except the most aggressive traders, the most sensible trade is to either leave MCP in place as a core or trending long position and chalk a pullback up to a "NORMAL", healthy correction or for traders, to exit it as I have in the trading portfolio, look for the end of the pullback, confirm accumulation in to the pullback and enter MCP again on the long side for the next leg higher.

 That being said, intraday we have a small range that looks like a bearish descening triangle, this "may" be random or it may be intentional as a head fake move. Being MCP was just featured last week on fast money, I'm guessing it is intentional and therefore a head fake move would make this trade much more attractive.

 There's migration of the divergence as you see on the 2 min chart above

As well as the 3 min chart above

and the 5 min chart above.

When I say a "Head Fake move of the descending (bearish) triangle would make the trade more attractive" this is what I mean.

I only propose this because MCP is on traders' radar because of the Fast Money CNBC piece. The descending triangle is considered a bearish consolidation / continuation pattern so most technical traders will take action as a short (short term at theat) if MCP breaks below the triangle (as retail technical traders always want price confirmation first) which should send volume up. They'd be expecting such a move which may draw in some sellers or shorts, then the move reverses to the upside, putting those shorts at a loss, causing the stopped out longs to get greedy and re-enter on the long side and this gives the move some momentum, however it's a true head fake move.

This would be useful to us to create a higher probability trade as the move below the triangle would make for a lower premium on calls (theoretically) and also serve as a reversal/momentum catalyst.

Such a move may make the difference between taking the trade or just letting it go by.

If you are interested, it's important to set price alerts so you know when any such move has occurred, we can check the move quickly for signs of a true head fake in that the move should see positive divergences/accumulation.