MCP Alert Right on Track

If you were involved with MCP (long), by the way, one of the components of the MSI, then yesterday's post, MCP Alert should have been indispensable.

The gist of the post was found in the first sentence,

"I think it may be time to take some or all of MCP off the table for now." 

That left us with a gain yesterday of about +9.25% vs today's loss of over -11%.

I do think MCP has a chance to add t upside gains, but nothing or very few things in the market are immediate reactions or events, they tend to be a process. If you look at yesterday's MCP post, even the sell alert was a process that had started days earlier, we just happened to hit it right on the nose.

Here's where we stand with longer term probabilities which were actually covered in yesterday's post and more specifically today's action.

 The daily candlesticks were but one hint in yesterday's post with two consecutive bearish/resistance depicting daily candles with long upper wicks and higher than average volume, typically indicative of bearish churning.

Today's engulfing candle took out the last two days of gains and anyone chasing MCP over the last 2 days, this is another example of why we don't chase assets.

 On an intraday basis, the most recent trendline was broken on heavy volume (stops), why wait for the stops/trendline to be hit when you have good information suggesting a high probability pullback a day earlier and you can exit at an additional gain rather than a  loss?

 I won't go in to the longer term probabilities of MCP as they were covered yesterday, but the near term probabilities represented by this 5 min chart were screaming that we have moved from confirmation to near term distribution and there was no edge, no objective reason to stay any longer than we had.

Intraday thus far we have downside 3C confirmation, we'd need to see accumulation of lower prices , a constructive pullback before re-entering MCP long which still is a decent probability, it just isn't right now. We need accumulation and a reversal process large enough to support a second leg up.

I hope any of you in MCP did ok in getting out yesterday.