EOD

It has not only been a strange week, but it has been strange since window dressing ended around Dec. 27th. At first I thought it was one of those times when the market is just opaque that lasts a day or two, but this is obviously something different.

A few things occurred today toward the end of the day and I looked at the market in a totally different way.

It's interesting that it occurred after the F_O_M_C and no doubt connected to it. T/he NFP today seemed like the worst reading imaginable and a safe zone for QE for a bit longer, but the real issue here is F_E_D guidance, bond traders don't forget, this is why yields on the 10 year blew through 3% after the F_O_M_C aggressive/hawkish taper meeting. You may recall, half of voting members wanted QE ended in totality  by the end of 2013, a few even wanted it ended that meeting or started.

Bond traders went nuts, that was what the F_E_D feared and yields popped above 3% like they have been doing the last week, the reason was F_E_D guidance which was rate hikes would follow the end of QE in about 6 months, that was the real key and rate hikes are amazingly destructive to a market.

I was chatting with a member and said, "Don't expect Wall St. to show their cards on the NFP print, they aren't that dumb and logistically we are essentially jet skis that can turn on a dime, they are super tankers that take 2 miles to come to a complete stop. Their reaction to the NFP will be seen in felt in the coming week/s and I don't think ti will be good.

Two major items this week, the unprecedented F_O_M_C inter-meeting survey which I've never heard of that showed us that F_E_D policy is being formed to some degree based on the F_E_D as a business, i.e., "The F_E_D sustaining capital losses", I've tried to make this clear, the F_E_D is a quasi-governmental/private corporation, they have share holders, they are not a government service, they are there to do a job for the government, but they are for profit.

The fact they openly admitted QE is getting to the point where it's not only not effective as far as bang for the buck which was a given as soon as they announced QE2, but what is becoming more of a problem is extracting themselves and doing so rather soon without taking capital losses. Just imagine the next crisis when the balance sheet is teetering on $4 trillion and they are facing losses. MY PREDICTION, "THIS IS A FISCAL PLANNING POLICY PROBLEM THAT CONGRESS NEEDS TO TAKE UP".

The other issue was the NFP today with a nearly half percent drop from 7% unemployment to 6.6%, which is 1/10th of a percent above the benchmark that has been part of F_E_D guidance as long as I can remember, "Accommodative policy will be removed at 6.5%". Accommodative policy is not just QE, in fact that's the smallest part, it's ZIRP and getting back to rate hikes. While it's true. they've backpedalled on that a bit, the facts are the facts, they are exiting.

What today's NFP showed us is exactly what I thought we'd see, but not to this extent. I think somewhere between 100k and 300k fell off extended benefits for January's NFP, that's going to be in the millions by the end of 2014, I think I heard 3 million so if a small fraction falling off send the labor force participation rate so low that a 74k gain on consensus of 200k can send the unemployment rate down by nearly half a percent, what happens going forward and what happens when the rate is below 6% which could happen at the next NFP in a month?

Watch the 10-year yield and the 3% mark.

Also I've noticed and will put out, a huge change in perception toward 20-30 year bonds, the volume has been increasing at an unbelievable clip, the bond itself has been flying, but that's not all. It seems there's so much desperation to find safe haven cover as the banks own a lot of Treasuries that are their class A collateral and the F_E_D owns 1/3rd of all issuance with the Treasury set to lower 2014 issuance as our deficits are expected to be lower, that means more and more people fighting for the same asset. For a long only mutual fund, there's really no amount of stock picking or dividend stocks that will keep them from suffering massive declines, I suspect this is the reason that EU, PIIGS (no less) have gone to market seeing an opportunity. Ireland had a successful auction this week, Portugal  had an oversubscribed debt offering and Greece is looking to sell bonds! GREECE? I thought Greece wasn't going to be able to go to market for years? 

Well if the demand is there, make hay while the sun is shining.

These are just a "FEW" of the many changes that finally revealed themselves late today. 

I think I've just scratched the surface of a change that has occurred in 2 weeks that introduces a whole new dynamic. Putting the pieces together is going to take a lot of study and some time, BUT I CAN TELL YOU THIS, IT'S IN THE AREAS WE HAVE BEEN WATCHING CAREFULLY, BONDS, BOND YIELDS, CARRY TRADES, THE YEN, MARKET CHARACTER AND NOW THE SHIFTING OF THAT CHARACTER.


CHANGES IN CHARACTER LEAD TO CHANGES IN TRENDS.

I have believed for a long time (based simply on comparing different markets back to the early 1900's (with 3C) that we are going to see the chance of a lifetime, perhaps of much longer and it will be those who put the pieces together and learn how to trade this market that will benefit from what's not only to come, but what is here right now.

You know I started the trading portfolio (start of December) not just to have a different perspective that is helpful for members, but to track performance and personally for me to decide whether I can do both without either suffering, my work here and my portfolio. I've found that it's not a problem, some of the things I was worried that may become an issue I have found ways to deal with such as posting trade timestamps so you know I gave the trade to members first and am not front running members like some other services are doing in illiquid penny stocks.

The point being, I've had this under consideration for a while, weighing the pros and cons and knew that I'd like to participate in a bigger way in what I think will be an unbelievable opportunity (not for all, I'm guessing 90% of traders will be crushed), but again the point being, after all of this consideration and patience, I've NEVER felt the pressure I feel now to fully fund the account ASAP.

Many members have asked about "blow-off tops" and the like, yes they occur, but for this to work for Wall Street, they aren't going to send up a flare letting everyone know that things have changed, they''ll be like a thief in the night and looking around today as you saw in several charts, we are not only past that point in which a flare would go up, we are on the slippery slope of the right side of stage 3 in more assets than I imagined simply because using the market itself as a map is a flawed concept.

There's more reason now than there was in 2000 for the market to see a sharp "V" reversal, that was largely based on a series of rate hikes back then, but at least there were fundamental reasons that changed our culture and the world forever, there was value and usefulness even if much of it was severely mis-priced. What we have now is not useful, it's not even in line with an economic recovery, it's a Ginger Bread house of liquidity, pure and simple so if the NASDAQ which was steaming ahead of the greatest innovation seen in nearly a century (so much so it took 6 rate hikes too finally kill the momentum), than what shall we say about the market that has no natural growth, has been a product of nothing but printing and proven flawed F_E_D policy (this period is VERY similar to the 1920's when QE was used successfully to turn around a recession and create a true economic boom before seeing the 1929 crash). What of the excessive margin at record highs with investor new worth are record lows? What of the structural integrity of the market's having been totally compromised so badly that on an average day the markets break down for no apparent reason and what of the liquidity providers and HFT?

No one can say, but I think it's safe to say that we will be in a full blown bear (and in many ways already are-market breadth is one) well before CNBC calls it.

I just can't imagine (and I've spent a lot of time studying and trying to understand the dynamics of the days in these charts) what we are in for when you consider the following...

NASDAQ 100 2000 top and bear market, note at least the volume was healthy and increased with price.

 3C going in to the NDX 2000 top and 3C now, a much larger, stronger divergence to the point that it's hardly fair to compare them.

The SPX-500, note the divergence at 2007, back then it was clear and monstrous, what can we say about the current position?

 After the F_E_D unleashed Quantitative Easing to head off a recession in the early 1920's, there was a period of prosperity known as "The Roaring 20's", however it seems the legacy of QE should have been considered more carefully by a policy historian like Bernanke. That's a pretty well defined divergence and good confirmation through the "Roaring part" of the 20's

Again...

What do we say about the same chart for the Dow right now?

 Weekly NASDAQ 100 2000 top

Weekly MSFT 2000 top 

 PCLN current weekly chart

NDX 1-day 2000 top

1-day PCLN current

These are just examples of what a top looks like before you know it's a top.

What I was talking about earlier has infected currency, carry trades, bonds, Index futures and probably way more than I've uncovered

I'm sure I'll have some interesting observations now that I've found that, "something" that has been so illusive this week.

HAVE A GREAT WEEKEND

Leading Indicators

I have a lot of homework to do this weekend, but it would seem form just the initial browsing around that there are those that feel the same way I do, that risk on is not a risk worth taking here.

As a result, it would seem the only way to push the market would be through gimmicks like the SPY Arbitrage and currencies, although they are going to be very difficult as the carry trade is being unwound, you have on one hand a need to push the market via currencies and on the other an authentic move out of the carry that prevents that as they are opposing ideas. Treasuries are the same, the last week or so I've been talking about bonds being bid not just in the US, but of all places, the PIIGS of Europe that weren't even suppose to be able to go to market for another 4+ years in many cases, yet they are holding or have held successful placements the entire week, even portugal, that's a flight to safety move.

The homework is weighing the risks here, I'm not joking when I say divergences get run over in a panic and the trade this week as strange as it has been fits with panic, the herd of fund managers has taken an every man for himself approach, the last time I clearly remember that happening, this is what the result was.

 AAPL's trends from a healthy (green) trend to the increased ROC in price (yellow) that serves as a warning, "The trend is coming to an end", by this time we were warning there's something big going on in AAPL, then the top (Orange) which also happened to be the area in which people were most bullish and "AAPL $1000" was a regular mantra of the longs and virtually overnight (considering the scale) a "V" reversal and a $390 point loss or -45% in 8 months, what took 3 and a half years saw nearly half undone in 8 months.

 I applied a Rate of Change Indicator to AAPL's price so you can see how quickly things change.

This was the divergence I was warning about as AAPL was making new highs.

I can spend the weekend showing you charts of markets and how fear is much stronger than green meaning bear markets fall much faster and harder than bull markets rise, or you can take a look for yourself, you know the 4 stages, just compare stage 2 and 4.

However, imagine what the SPX might look like considering it was lifted on F_E_D liquidity alone, not fundamentals or real growth or economic prospects and then take that crutch away as we are seeing now (interesting that the market started to clear up after today's NFP and almost a half a percent drop in the unemployment rate, just 1/10th of a percent above the area they originally said was the target to remove accommodation (6.5%).

Then apply the principle of Fear is stronger than greed and a few other broken market principles such as the exchanges literally breaking every month and HFT's and then add the Global economy and how it's never been so intertwined.

What might that look like? As I have said for a long time, it might look like, "The opportunity of a lifetime"

SPX?

I'll get to leading indicators in a bit, I need to check the close, but note HYG and VXX, you can see what's going on easily.

Important Market Update

This is a pretty important one and it's a rather tough one. As I've been looking around at numerous assets from carry trades, the Yen, Index Futures and especially stocks, I'm seeing this same pattern over and over again. Today gave a little more insight because of some signals, my problem in showing you this is that I've seen so many that I can't impress that upon you enough without posting hundreds of charts.

The general idea falls back to the concept that nothing moves straight up or down, the gaps and holes, volatility and shakeouts.

There are a number of very short term positive divergences, in fact the trouble I'm having is deciding whether it is even worth trying to play any of them or use them as a hedge because the other side of the spectrum is so ugly that I'm afraid to even enter any of these long.

I'd say the most sensible thing to do would be to see if there's any upside that can be gained off these moves and use that as the entry for shorts, add to positions, etc, but this is way further along the line and much uglier.

I'll try to give a few examples with some stocks we follow and are major names. Rememer that the really convincing probabilities here is that this trend is everywhere once you recognize it, is currencies, Index futures, stocks, carry trades, etc.

I'd say that the market has rolled over and we are on the right half of that rollover and these smaller moves that look to be forming are just volatility moves, the danger is on the right side of the roll, that's where you get the big, nasty drops, which is why I'm very nervous about even entering any of these as even VERY short term trades or hedges.

I'll use NFLX as an example and then show others, the others can be summed up in 2 or 3 charts maximum from the 1 min to the daily or 4 hour timeframe.

 NFLX 1 min with an intraday positive, I'd never trade this long based on a 1 min chart only, but there seems to be something developing there today.

NFLX 2 min looks more impressive, but remember, this is only a 2 min chart, I usually wouldn't even take a short term 1-2 day options trade without a 5 min positive. NFLX is one of the few that does go out to a 5 min positive, but right after that at the 10 min chart we get this which is a transitional marker.

10 min has nothing except in line downside.

This is what I think the short term trade is and the real end game.

 assuming this is the short term move, a gap fill or just some kind of volatility move that gets longs excited, I don't even know if it can make the normal extreme move that the market puts in because it's needed to move sentiment and emotion, but NFLX, like so many others have turned already and we are on the right side of that turn.

What moves a market? Some say supply and demand, but the real mechanism is fear and greed and fear is ALWAYS stronger than greed, that's why the right side of a pattern like this is so much more vertical on the downside. I'll show you in a minute.

This is what I believe the full picture looks like, so you can see my hesitation in even considering playing a long side move or even a hedge, the risk : reward profile is drastically different on the right side of the roll.

Example...

This is a weekly chart of the SP-500, it doesn't matter the chart, index or asset, it's the concept of fear being stronger than greed.

The bull market (white) lasted 5 years (#1), at #2 you have the roll. The current move I'm showing above would be something like #3, except #3 here is a lot larger than what we'd get from a 5 min positive divegrence.

#4 is the point, all of the 5 year bull market was erased in 16 months, most of it in 8 months and then some as it went even lower. Just look at the slop of the white arrow vs the red arrow. I don't want to be caught on the wrong side of that red arrow area.

Continuing with NFLX...

 The 30 min chart already has tomns of damage and nothing positive.

This 60 min chart also shows even more damage and gives you an idea of what the actual top structure looks like.

The 4 hour chart is exceptional amounts of damage.

Other charts can be summed up with far fewer charts, I just wanted to give a bigger overview with at least 1 asset.

 BIDU 2 min positive, not much and it's already started a move.

At 15 min it looks like it has clearly peaked.

The 50 min chart gives some idea of the downside implications and why I'd be very nervous to be on the wrong side of the trade as this is the kind of area that I've talked about that is surprising and extreme. You wake up one unsuspecting morning and have a gap down that takes out months of longs, that creates a lot of snow ball effect.

AMZN

 3 min positive

At 15 min it's done.

And the downside risk...

PCLN

 5 min positive, I've hoped to see this above $1200 to finish adding to the position.

PCLN coming down on the right side of the roll, or top.

If there were stronger charts in PCLN, I might take the trade to $1200 as that's where I've always thought it would go and that's where I want to fill out the core short, but that 4 hour chart at this stage, will run over a lot of divergences.

AAPL which is a bit different because it already had a -45% loss

 1 min positive, I'd say this is positive to 5 min, but that's still not a very strong divergence

At 30 min...

These are just a few examples, the really strong and more overwhelming case here is in how many charts are almost exactly the same, how many different assets, carry trades, the Yen (positive)...

I may let some more time go by and see if there's a stronger case for a long or a hedge position, right here and now though, I feel it's too dangerous, but at least now I understand why the change of character since the New Year is so different, we are in a totally different place.

It's time to do some house cleaning and thinking about how you want to be positioned and it's time for me to fund my account.

IOC Update

If you stuck it out with me in IOC (long), I'm sure you are feeling much better now than a week ago, but we don't stay in these positions that are losing without a really good reason, IOC had several good reasons, now it has several even better reasons.

There was a really nice move today of over 4%, but more importantly, through a resistance area. I want to give you a feel for the probabilities and where there's likely going to be some turbulence, basically I'm trying to anchor expectations so when you see something a day or a few days from now you can think back and remember, "Oh yeah, we were expecting this and it should be fine". I find that anchoring expectations helps in keeping decisions more objective and less emotional.

IOC's daily chart shows a significant gap down on 12/06 with heavy volume. Many times these gaps down are or use to be known as "Exhaustion Gaps", they were/are useful in finding either a short or primary trend capitulation event which would be the event that ends a stage 4 decline, similar to the upside exhaustion gap that is a large move up with a small daily candle body and huge volume that often marks the end of an uptrend, stages 2 and 4 are very similar, except polar opposites, both are trends and both lead to stages 1 and 3 which are similar, but polar opposites as a base or a top.

The thing with a capitulation event in which all weak hands that intend on selling all sell at once is that traders can often enter too early as price tends to slide a bit lower before moving to a new phase.

 Here's the actual event. Never enter a trade just because you think it has moved too far in one direction, that's not a good reason to enter a position, there must be something more.

Luckily IOC has come alive, it has cut the initial losses we saw by two thirds or more and is now moving toward a gain.

 Like UNG  or more specifically DGAZ, we have a similar inverse H&S bottom, a slanting neckline like this does not invalidate the pattern, you see them all of the time, just in textbooks they cherry pick the best examples and people tend to overlook real patterns because in the real world, we get a text book pattern maybe 5% of the time. 1 is the left shoulder. 2 the head, 3 the right shoulder, 4 the neckline, 5 is initial resistance that was blown through today on a solid move and 6 is where we have overhead resistance that is likely to cause some volatility, but I think we'll make it through the area.

This 60 min chart's divergence is one reason I think we'll make it through the area.

The initial bottoming/basing process (as mentioned before) was broken, this is a type of head fake move as early longs get shaken out and if they don't have a good reason to stay, they move along, you see this 95% of the time with a primary trend capitulation event.

The 15 min chart shows accumulation at the head and right shoulder and a leading position so it looks good for a longer term uptrend. I would not be a buyer here as it's too far now from a natural stop, but there's a possibility of a new entry or an add-to entry coming up.

So I'd expect some resistance and volatility at the overhead resistance zone identified on the chart with the numbers (#6), but all in all I think there's a divergence large enough to blow right through it. If this were all we were going to get from IOC, then we likely wouldn't see anything beyond the 15 min positive that's in place.

UNG/DGAZ

Depending on how aggressive you are as a trader, UNG should see a bit more of a bounce and DGAZ a correction, I'm not going to get that aggressive in trying to trim around the bond and I'll leave positions the way they are.

I'll  update the charts, but more along the context of the expected move, this appears to be nothing more than a normal correction given UNG broke under its H&S top (small, not major ) yesterday. There's always the chance of a volatility shakeout of shorts with a H&S top, but since I think the UNG H&S is more related to a pullback rather than an actual top and since it's much smaller than the typical H&S, I don't put high probabilities on a volatility shakeout (the third place I'll short a H&S top-after the initial break and a bounce back above the neckline that shakes out the initial shorts).

 UNG 60 min H&S top that broke yesterday. Technical traders chase stocks, but in their view, it's confirmation so any trader seeing this small H&S would be likely to set a price alert for a break under the H&S's neckline (red lateral trend line) and enter just as soon as there was a break, this is in their view, "Confirmation of the bearish price pattern", however Wall St. knows all of this, they know how technical traders think because the same dogma has been preached for literally a century.

Often on bigger H&S patterns we see what I call a "Volatility shakeout". This doesn't mean the pattern is any less real, it's just that Wall St. knows traders like to enter on confirmation which puts them in the position as it has already made a significant move down from the top of the head or right shoulder. Traders can't tolerate stops that large that they will put them above the right shoulder or the head so what they'll do, since Technical analysis teaches universally that once support (the neckline) is broken, it should act as resistance, is to put a stop just above the neckline which makes it very easy for Wall Street to shakeout these shorts and steal their shares at a more advantageous price, above the neckline.

the entire volatility shakeout would look like the above. Many other traders will wait for a bounce back yup to resistance (the neckline that was formerly support) and they'll enter the short there as long as it seems like the neckline is holding as resistance and they'll place their stop just above the neckline. This is actually a high probability/low risk entry if it weren't for the fact that Wall Street and any trader who pays attention knows that this is what retail will do and as such, will make a move to shake them out "S.O." This use to be my entry of choice about 15 years ago before Technical Analysis caught on with the advent of online brokers and it worked well.

I kind of doubt this is what will happen in this situation as I explained at the top of the post.

UNG's 5 min chart shows a bounce and it has started, but I think it's actually a healthy move for the DGAZ long (UNG trading short). For me, this has no bearing whatsoever on long term/Core/Trend positions in UNG, I just leave them alone.

 DGAZ which is the 3x leveraged inverse of UNG (actually inverse Natural Gas) is showing a similar 5 min divegrence which is the direct opposite as DGAZ is the direct opposite of UNG so that's good confirmation.

 However what is more important to me is the larger trade, it's the basis of the DGAZ long (Nat Gas short position). We have UNG 30 min above, accumulation and a head fake move in the yellow box to the left which serves as an excellent timing marker for the move as it did here and then a move up in UNG that is confirmed by 3C making higher highs with price (green arrow) and then we get the H&S pattern with a left shoulder "LS" a head and a right shoulder "RS". The 3C divergence at the head and continued through the right shoulder is exactly what we'd look for no matter how big the H&S top (this is small).

DGAZ 60 min chart has a bit more history, but you see the negative divegrence sending it down (this is where UNG is heading up with confirmation), the downtrend also has 3C confirmation as it makes lower lows with price (green arrow) and this confirmation of UNG. Then instead of distribution as we see at UNG's top, we have accumulation at DGAZ's bottom and a leading positive divegrence so once again considering these two are near mirror opposites, we have more excellent confirmation and the basis for the DGAZ trade. This is the reason for the trade so a shorter term 3 or 5 min divergence isn't going to scare me out of it.

 This is a closer look at DGAZ 15 min chart, it's actually an inverse H&S bottom, but the point is the reversal process (yellow) and the accumulation in to that process. The initial move up in DGAZ yesterday and down in UNG are a little sharp, not quite parabolic, but a little too vertical for them not to pullback and correct the situation. Allowing a move like this to continue is how you get thin moves that see excessive profit taking too fast and ultimately reduce the size of the move.

I drew in what I'd expect as far as a correction, this isn't exact, but you see what it does for the trend in alleviating that vertical move and in any healthy stock trend (I can't blame you if you are not use to seeing it because of the market's behavior over the last 4 years) you'll have a series of advances and corrections so it doesn't reach an overbought condition which is really what I described above, a move too far, too fast that gets sold and doesn't live up to its full potential.

This is the same idea on UNG's chart, a little too steep of a drop yesterday so a correction today is natural.

If this turns in to something else like a volatility shakeout, no problem. So long as the signals remain, we take lemons and make lemon aide. This creates an excellent entry for anyone who might be interested in the trade or even an add to position as it reduces risk significantly.

Quick Market Update

Don't forget today is an op-ex day, it kind of got lost in the NFP data.

We do have some intraday signals that are positive in the SPY (to a lesser degree), the Q's and IWM as well as some index futures, again ES is the weakest.

There's a clear SPY Arbitrage going on at +.50 as HYG is pushed up and VXX down. TLT is up, but has intraday negative divergences implying an intraday move down which will help the SPY arbitrage.

These are pretty clean signals, but seem more to be intraday and likely more about op-ex, at least until 2 p.m.

MCP Jan. $5 Call Follow Up

We're always learning lessons, hopefully, and the lesson I learned, is even if I expect a short term trade, stick with at least 6 weeks of expiration on an option. I've been using 2 months typically even on what I think will be very short term trades, I'm not seeing 200% gains, but I'm also not blowing up options portfolios like in the past. Options are the closest Wall St. gets to Vegas and the same rules apply, the longer you sit at the table, the higher the probabilities rise that the house will win.

For this reason I try to take my gains and walk out of the casino, don't forget that options are a derivative product and don't forget who created them and made sure that the house always wins. The only way I've found to beat the house is to do everything the exact opposite of the appeal they created and drew you in to the game with. For instance, cheap out of the money options let you control a boatload of shares, you are thinking about how much money you'll make if that boat comes in, and if it does, it's even more dangerous because now you've set a precedent that you believe works. Options traders tend to stay at the table too long hoping that 75% gain will turn in to a 400% gain; it's just like Vegas or the Lotto.

I treat options the exact opposite, I only use them when I have to which means there's no other way to take advantage of a great signal and make it worthwhile from a profit perspective, I buy quality in the money, not out of the money and I get out at the first sign of fading momentum which is often a day or two. We tend to walk away with 30-50%, but that's what the goal was, to make the trade worthwhile, not to try to get rich overnight. I also tend to go for contracts with a LOT more time than I think I'll need, at least 6 weeks minimum, but I made the mistake of going with a shorter January expiration with MCP because I thought it would be a quick trade, bad idea, I learned a lesson, I broke the rules and now am having to relearn that lesson.

In any case, MCP calls are not too bad, they are down just under 32% and that can come back in a flash. The question is, "Is it likely to come back?" I had to make this decision a couple of days ago, I let go of AAPL calls at a loss, luckily the SLV puts more than made up for it, but I considered MCP at the time too, whether or not to take the loss then and decided that there was enough data that they were worth holding. At some point, maybe even worth adding to or putting them out as a new trade.

So here's the MCP update as MCP is up just under 3% today. I wanted to make sure that my initial observations had some meat on the bone before I presented MCP, this is a trade update, not a new trade post, however that may very well develop. (MCP CORE equity long positions are still open, trading equity positions were closed before the pullback).

 This is the X-Over screen I use for several different reasons, I don't need it to see MCP broke out of a tight lateral base, but it is useful in that the first pullback is usually to the yellow 10-day or bar moving average and the second or subsequent pullbacks are deeper to the blue 22 day  or bar moving average. In this case we are near the 22 day and also at the area of support that was formerly resistance of the range and became support after the breakout (at least according to generally accepted Technical rules.

However it's important to pair the right timeframe with the character of the stock, you can do that by looking at the historical character of the stock and fitting the timeframe to the asset like here I'm using a 2-day chart which actually fits better with MCP's character, but be careful not to over-fit any indicator and don't change them as the trends change.

With a 2-day chart we have a pullback to the 10-bar m.a. and we have a hammer candle, this is why it's important to look at various timeframes, there are things there that you wouldn't notice otherwise and they are just as valid.

As for the 30 min chart, you can follow the divergences and even a head fake move to the far left out of a bullish triangle and to the downside, the accumulation in the range which is actually a small double bottom or "W" and at "A" what I'm pointing out is the parabolic nature of MCP's breakout, you probably know that I don't trust parabolic moves, they tend to end up just like this.

 The 15 min chart is nice and clear as well showing the loss of 3C momentum or selling in to the parabolic move, this is a visual representation of why I don't trust these vertical parabolic moves, but since then it seems that the pullback has been accumulated.

A pullback of an otherwise strong stock (as in longer charts like the 30 min above are powerful) is a fantastic entry in to a new trade or an add to. When a stock pulls back we have movement and we can either see distribution, in line or accumulation indicating a healthy pullback and buyers are interested in the stock at a lower price, in fact they likely created the pullback to add to their position at more reasonable prices and it allows them to add to their position without sending price against them as demand tends to send assets higher.

On the 3 min chart there has been a recent change in character, the initial hint I had to keep MCP open at "A" is a relative positive divergence, it means that on a relative basis, 3C is higher at the last point than the first even though price is lower at the last point vs the first, IT'S A RELATIVE COMPARISON BETWEEN TWO POINTS.

If that divergence is strong enough, typically what happens next as accumulation builds is we see a leading positive divergence and that's what we have at "B" so I think my initial thought s on MCP were justified by the current divergence.

5 mins is an intraday institutional timeframe, I warned at least twice that MCP was going to pop to the upside because of these very same divergences to the left and it did, then I warned that MCP was likely to pullback and trading longs were closed. I thought we'd get a quick bounce before the pullback continued, that didn't happen, but now it seems the pullback is nearing its end.

You know what we want to see from here, a reversal process so we want to see some lateral price action rather than the trend down and a "U" shape, that may be enough to call out MCP as a new trade in equity (long) or maybe even in options if we were to get a head fake move that reduced premiums and set up a strong options trade, but otherwise, with the Jan calls that are open, I think they'll be okay and at least do better than where they are now if not actually make a profit so I'm going to continue to hold them until or unless something changes for the worse, but so far, the initial positive signals have matured and we look to be close to support and the start of a reversal process that need not be very large proportionally speaking.

Good luck!