Important MCP Update

We have some newer members that may not be up to speed on the macro-view of MCP which is one of a handful of stocks that I believe can and will start their own primary bull market despite what the broader market does which is rare as most stocks float with the tide.

I'm not goingLets just go with charts...

 Here's a daily chart of MCP since inception, we see the 4 stages, Stage 2 Mark-up/rally, Stage 3 Top, Stage 4 Decline, Stage 1 Base and in order just as they should be. This is a fractal concept that can be used with any asset in any timeframe. The stage 1 base is over a year long so it can support quite a move. The 1999-2000 Home Builder accumulation I have shown on occasion while the Dot.com bubble was busting were about the same size and there were some moves in excess of 2500%

If you look at the chart's multiple stages, there's a certain proportionality that you get use to seeing after understanding stages and looking at enough charts. Even the recent move below support (head fake move) is VERY proportional.

 Daily MCP Base- closer look. With a base of this size and a rectangle with solid support at the same level through the entire base, there are a few things we are looking for before stage 2, one of the last things we'd be looking for is a shakeout of any longs (head fake move) just prior to the transition to stage 2 mark-up which is the trending stage or THE EASY MONEY. The most obvious shakeout is a stop run especially since support has been so well defined as well as the base's rectangle price pattern.

Even here, although the decline post earnings that created the head fake move seems dramatic, it is VERY proportional. These head fakes are meant to do a job, scare out all longs so they tend to be extreme. You may recall from our most recent long entry and call options entry that we waited most of the day as MCP traded around $2.53-$2.57 for a break below $2.50 as it's a psychological level where stops would be piled up as well as orders (shorts), volume spiked on the break of $2.50 as the stops were hit providing smart money with cheap supply and plentiful and the next day it was up over 12%.


 This is a 60 min chart ofMCP post earnings, this is very reminiscent of a RIMM trade we did some years ago where we had very positive 3C charts in to earnings and suspected there might be a bullish leak of earnings only to see RIMM fall on disappointing earnings, however the 3C charts never deteriorated, they got stronger so we held and a month or so later we find out their long time twin CEO's were departing in a major shake-up of the company, this is obviously the inside information that was causing the accumulation as the losses in RIMM turned in to a double digit gain from there.

Some members have commented on the Inverse H&S like look of MCP in this area which I consider to be a head fake move (below base support) as well as a reversal process of that move to bring us back in to the base and eventually to stage 2.

Whether this is an IH&S or not, the accumulation is there.

 This is a custom cumulative volume indicator I threw together to make volume trends easier to spot. As far as volume confirmation of an Inverse H&S, volume is right on the left side of the pattern, only at the yellow arrow is volume a bit light, but with this price pattern, volume is not that important until the head and to the right of the head, there it is essential, even more so than a regular H&S top.
We have increasing volume on the rally from the lows of the head which is what we should have and now we need to see increasing volume on what would be a breakout from the base pattern, so far so good as this is an hourly chart and the break to the upside just started around 12:40.

 As for 3C, this is the 2 hour trend, you can see when it was near resistance or the high end of the price pattern, there was distribution and then a Goldman Sachs downgrade sending MCP to the lower end of the base where it is likely to be accumulated in greater size (on the cheap) which happened right through a descending (bearish) triangle. The 3C leading positive divegrence since the decline below the base/triangle has seen a new leading positive high giving us strong evidence the supply from all of the stops and lower price was accumulated in large size even after a year+ base.

 60 min chart of the descending triangle which actually was showing accumulation as it is at the low end of the base. You may remember we were long when MCP broke out on 4/22 and we had a 6+% gain, this is when I started getting nervous because there was a low probability of a stage 2 breakout on a base this large with support this obvious WHEN THERE HAD BEEN NO HEAD FAKE MOVE FIRST. 

Later that day 3C was not confirming the breakout and we got out around a +6% gain on the day and MCP fell right back down (before earnings). That's how strong this head fake before reversal concept is, that was the original reason I wanted to get out on a 6+% breakout day.


 This was our last trade in which I /we filled out the half size position when price broke <$2.50 and hit stops on accumulation, we also entered a call position on the same day, 6/3 (you can find the posts in the archive on the member's page to the far right about half way down) and we closed the calls the next day on 6/4 as this small, "V" shaped reversal was not strong enough to support a real breakout move, it was a reversal event rather than a larger reversal process, however I suspect that price action since the lateral range after the earnings drop has not only been the head fake move I was expecting, but also acting as the reversal process in which case, it's plenty big.

Note the volume on today's move thus far as MCP is now +4.5% 

 There wasn't any huge accumulation signal yesterday, but a smaller one that we use to often see just before a move which I always attributed to market makers/specialists loading up for the move.

Otherwise, the accumulation through nearly every timeframe ha been there this entire time, thus the reason I've held and added the full position size on 6/3.

 Right now, using the Trend Channel, we'd need a close above $2.93 to break the downtrend, the next significant level would be a close >$3.02 , you might want to set some price alerts.

Finally, my Custom DeMark inspired buy/sell-sell short indicator gave several buy and one sell signal, the past signals have been right on. I also see a very tight Bollinger Band squeeze just after two buy signals.

As I said before, I don't see any reason this couldn't be the real deal, early in June the sharp "V" reversal was reason to doubt the move and before the earnings decline, the fact there was no shakeout/head fake move was major reason to doubt a move, but now everything is in place, even the head fake move on 6/3 of the post earnings range that took out stops at $2.50