MCP Update

Yesterday I put out another MCP Update which was interesting because of a stop run that did hit stops and some orders as was apparent by volume, there were also larger positive divergences in the area and especially on shorter timeframes suggesting that those stopped out shares were accumulated, this is to say nothing of the "RIMM Scenario" I have outlined in recent posts.

MCP is nearing an area or scenario where I would consider filling out the half size spec. position to a full size or if I was not involved in MCP I would certainly be considering a position as the risk is much, much lower now for new positions.

Here are the charts this morning and what I'm going to be looking for and at what levels I'll be setting some price alerts.

This is the break of $3.00 and the volume surge where stops would have been hit and some orders likely placed. $3.00 is significant because of the whole number, psychologically our minds gravitate to even/whole numbers (just think about retail sales, you'll never see a product for sale for $3.00, almost always it will be $2.99, there's a reason for that just the same as there are psychological reasons for the colors companies choose, take fast food for example, Burger King, McDonald's and Wendy's all use the same color scheme, red and yellow because red is the first color your eye focuses on and yellow is associated with hunger/appetite). 

What was interesting about the break of $3.00 is not just the supply it creates. In last last night's post, Dow Closes Red for 2014, SPX Makes it Back to VWAP I gave a few examples of some position sizes for David Tepper's Appaloosa Fund, moderate size positions like GOOG were still a nearly half a billion dollars and larger positions in SPY Calls were $1.1 billion dollars in this single fund alone according to the Q1 13-F filing for the quarter ending March 31st, of course that was 45 days ago and his positioning is likely very different by now, but that wasn't the point, the position sizes were.

And the point of the break of $3.00 and volume it created was the supply it created at lower prices and the positive divergences that indicate to me that this supply was absorbed by a large buyer, the first 1 min bar that broke below $3.00 saw volume of 1,0596,000 shares alone, again the point being, accumulating a position for a large fund is not a simple issue and being on the other side of the trade with a stop run like that raises very little suspicion about who's on the other side of the trade accumulating.


Here are the divergences in the area...

 1 min

2 min leading positive. Note there's a slight relative negative divergence as higher prices this morning did not produce a higher 3C reading, this is VERY minor, but suggests an intraday pullback that can be used to buy in to price weakness and underlying strength.

 3 min leading positive and another small relative negative divegrence within the larger leading positive.

And the 5 min chart.

It's not that the longer charts aren't important, but I covered them yesterday and they likely haven't changed in such a short period except to improve with these timeframes all being positive.

I'm setting price alerts for a move in MCP BELOW $2.84, $2.80, $2.77, $2.74 and $2.71 so I'm reminded to check and see if it looks like a reasonable area to look at entering some more MCP as it is still a partial position.