As most of you know, MCP is a long term (long) favorite. MCP is in a large base and I think it will enter a primary uptrend despite the market, which is not all that common, most boats float with the tide so it makes a nice little addition (in my view) for true diversification as the F_E_D has the market so correlated people think sector rotation is something that is suppose to last for 6 hours.
In any case, I try to maintain a CORE/Trend long position in MCP at all times, but on a trading basis we have been in and out and used leverage here and there and have done pretty well.
One of the last updates as far as what we were looking for to start an MCP long position (on a trading basis) was from March 25th, and in that post we were looking at a symmetrical triangle on that particular day that was pretty mature, just about at its apex and I asked the question, "What do you think is most probable?" and almost all of you who answered said the same thing that I said in the post...
From the post on 3/25...
"
MCP daily triangle, there's a decent chance for a head fake/stop run, if that happened it would be even more attractive as a long"
The next day MCP Update...
This was what MCP's daily chart looked/looks like, the head fake move would almost certainly be there, today's move below the triangle will likely turn out to be a head fake move, but just like earlier today when I didn't enter the IWM calls on the break of $116.19 because I didn't have confirmation yet, we need confirmation no matter how likely if we are really going to have probabilities lined up on out side."
And...
"
If you look at MCP's 15 min chart, what's missing now?
If you said a reversal process you are 100% correct, even with a 1-day or half day move down, we still should see a proportional reversal process whether in the form of a "U" or a "W" or a rectangle, etc."
So what do we have now?
From the first day it was brought up as a new trade on the 25th and what we were looking for, a break below the triangle and a reversal process. The reversal process (as reversals are almost always a process that takes some time rather than an event that is a sharp "V" reversal) is apparent on a daily chart, that's pretty impressive.
Since MCP is still so low in the base, I wouldn't be opposed to setting a limit buy on this above the apex of the triangle, it's not something I like to do (chase prices), but I think MCP will be fine as long as you remember it's still in the hot/volatile zone of a base and give it some room in your risk management plan (I';d rather take fewer shares and have a wider stop when we're in a stage 1 base or stage 3 top).
Unlike VXX which I noted this week and said it was uncommon for an asset to start accumulating right away on the first break in a head fake move (usually they are lowered to the target area and then accumulated), MCP was brought down to what must have been a fill area for a larger order, you know I think Goldman Sachs is one of the players long MCP. The 3C downrtrend confirmation at the green arrow demonstrates what I'm talking about followed by some positive 5 min divergences.
We see the same on a 3 min chart.
And intraday the 1 min chart has been busy...take a closer look...
MCP 1 min.
All in all I still like it, I liked the idea of a phased entry or just waiting on a move below the triangle to get in at a better price with lower risk.
In all honesty this isn't the most impressive divegrence I've seen in MCP, but I have no problem holding the long position or adding to it if I had room to do so.
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