MCP Looking Very Interesting

MCP has been with us for some time, I kind of find it a little ironic that we were long MCP in to a breakout from a triangle on April 22nd, as far as price action goes we had over a 5+% gain on the day, but exited the same day and closed the long because it first and foremost, didn't post a head fake move before breaking out, that's how common they are, especially in a long term support area which was the support of MCP's base.

If you look at the post earnings action in MCP on their own, it looks like a slaughter, in price alone it is a slaughter, but there's still that RIMM experience in which we've seen this before, the 3C charts don't confirm the downside, but rather stay very positive and we only find out later what the reason was after RIMM not only regained all of the post earnings losses, but went on to put our long at a significant gain for an equity long only position.

When MCP's decline post earnings is looked at within the context of the entire stage 1 base, it looks exactly like the head fake move that was missing and caused us to CORRECTLY sell MCP the day of the breakout from the triangle.

I'll let the charts build the rest of the case. However, I do think I'm going to fill out the MCP long (it was entered as a spec. half size position as it was just before the wild card of earnings), I'll let you know when I decide to fill it out, but it will be within a day or so I believe.

 MCP daily chart, there are two distinct areas of what looks to be a very large stage 1 base, the larger rectangle and the smaller descending triangle to the far right , both share the same support level.

When looking at the post, earnings decline, this is essentially about the size head fake move I would have felt comfortable having in place before hand on the breakout from the triangle in April when we closed the MCP long as the breakout failed days later and only added about 1.5% from where we exited before failing.

 This is the trend of the 1 min chart, one of the first things that stood out about the post earnings decline was not only that the fastest charts like the 1 min which could have confirmed the downside move within the first hour of the first day after earnings, not only did not do so, but it actually went the other way in going positive in to the large amount of supply that was created. We know smart money's positions are so large that they need pretty extraordinary amounts of supply to get in to positions without either driving price against the position they are trying to create or without raising the alarms with the predatory, front running or "Ice-berg" hunting algos.

There was a negative, not very large, more along the lines of a steering divergence that sent MCP below the psychological stop level of $3.00 where another round of supply was created in to another leading positive divegrence. Then only 1 more small negative right at resistance of $3.00 sending price a bit lower where a new leading positive high was put in.

This is the 2 min action leading positive right at the break and subsequent price action below $3.00.

 This was another curious chart right after earnings, the 5 min chart which could have confirmed the downside price move after earnings the first day, it did not and remained in leading positive position.

 The 10 min chart is interesting as it shows a leading positive divergence in to the triangle area, but would not make a new high at the breakout whiich was another reason we exited the trade on the breakout day, a lack of confirmation, but there's still a leading positive divegrence there.

It's as if the area was under accumulation, but there was going to be no chasing of higher prices, as if they knew there would be lower prices available soon to accumulate instead.

This chart could have also confirmed the downside post earnings price move the first day of decline, but stayed in leading positive position.

The larger picture of both base areas or one large one on a 30 min chart, it too is leading positive, most of that came only after Goldman Sachs released something on MCP that knocked price down from the top of the range to the support area at the bottom, this is when the larger underlying flow of the 30 min chart went leading positive and remained there although this chart too could have easily confirmed the downside price action by now easily.

 The same is true of the 60 min chart at the same area.

This is the 60 min chart since the post earnings decline, that's a very strong leading positive divegrence for an area that is supposedly being sold by smart money according to price action.


As I said, I'll let you know when I decide to add to and fill out MCP to a full size trading position, which may become a core position. I just want to take a closer look and make sure there's a low probability of any near term head fake moves, I really don't see the advantage in running one considering how sharp the post earnings action has been.