MCP Post Earnings Update

I usually don't react to price movement in after hours when a company reports earnings, unless the initial knee jerk move is so strong and profitable that taking it off the table makes sense, usually though I wait for the next day and specifically near the close of the next day when the pros come out as early morning is dominated by retail trade.

MCP was featured here yesterday as it was setting up a move we were looking for which is all explained in this post from yesterday, MCP Update/ Possible Trade.

I also liked what I saw in MCP, but being it was right in front of earnings which is always a wild card, I decided to go with a speculative 1/2 size position in the trading portfolio.

" I'm going to go ahead and take a chance and open a Half Size trading position in front of earnings (equity long), as there's just too much there that looks out of place or, lets just say, "manipulated"."

Earnings came in at -0.29 vs consensus of -0.198 and MCP took it on the chin in AH, however their 9 a.m. conference call this morning stabilized the stock, it didn't lose any more ground.

Some of you who have been around a while may recall we took a pre-earnings trade in RIMM as the divergences looked like there was a leak, RIMM didn't respond well to earnings and fell leaving us with about a 10-15% loss the next day, however, the 3C signals remained very strong and we stuck with the trade long. It was only a little later that the twin CEOs stepped down and major changes were underway at RIMM, it seems that is what 3C was picking up, smart money apparently knew there was a major shakeup at RIMM coming and we had simply mistaken the positive signals for an earnings leak.

MCP is in a similar situation. I went ahead with a half size position because of the wildcard of earnings, but also because of the set up we were looking for which is detailed in the post from yesterday linked above. So for now, I'm going to stick it out in MCP, until/unless the 3C signals start to deteriorate, but so far they have acted pretty good.


*Be sure to see the trade set up we were looking for as we exited MCP on a breakout from a large triangle which ended up being a false breakout, we left with a small gain, but one of the main reasons we left the trade was because the process underway right now in MCP had NOT occurred BEFORE the upside breakout, this is all covered in yesterday's post*

 This is MCP's 60 min chart, volume is rather large thus far, I'm interested in the closing volume and candle as this mat create a 1-day capitulation event.

The move we were looking for and the reason we didn't trust the breakout from the triangle as can be seen above, is this move below the triangle which should occur before MCP takes off to the upside as the triangle itself looks engineered, specifically set up rather than being a natural occurring formation and there are a lot of good reasons for Wall St. to create such a triangle.

 This is the 2 min intraday MCP chart this morning, no downside confirmation, in fact we have a leading positive divegrence.

 The 2 min chart was positive before earnings, it's even more so after earnings near a new leading positive high.


And the MCP 10 min which is leading positive with no downside confirmation.

I did not go beyond 10 mins, not because there's anything there that doesn't look good, but simply because at this point in time, I wouldn't expect there to be a reaction on charts longer than 10 mins based on the after hours event.

I think it's pretty clear why I continue to hold MCP given the charts above.