Friday, June 28, 2013
MCP has been a position we've had interest in for some time. We did however have a MCP "New Position or Add-to" alert on 6/21
The alert came out right where the white arrow is on this 30 min chart.
Around 11:10 this morning the MCP July $5 calls were closed in this post, "MCP Position Management" I said I'd be closing the calls as I didn't see any further momentum that would add to their value short term, but since the equity position doesn't rely on volatility, time decay, etc. I also said in that post that I'd leave the equity long position open.
Later in the day at 3:36 I posted, that I'd be taking at least half of the long equity position off the table this turned out to be the intraday highs of the day and this is the P/L for the equity position below...
At the $6.17 fill, the P/L for the equity MCP position came to +8.25%.
I love MCP and look forward to re-entering the position.
When traders chose positions, they get it all backwards, they pick the stock and then they hope the market cooperates with their position.
The greatest force moving the majority of stocks on any given day is the market, the second largest force (typically and more specifically in a healthy-non-manipulated environment in which Sector Rotation is active) is obviously Sectors in or out of rotation and finally, believe it or not, the least influential (of course with obvious caveats) is the stock itself. In our case this is not as true because we can see where extraordinary events are occurring such as in MCP.
In any case, closing MCP right now has a lot more to do with general very near term market conditions than the stock itself.
As I was saying, I love MCP and beyond the typical "Move with the market" assets, there are a few out there that have their own legs and will either buck the market's trend or they will trade directionally with the market, but have much better relative performance.
I'll post MCP charts as well so you can see why I'd like to re-enter MCP at more favorable prices.
This is the MCP 3-min intraday 3C signal going from accumulation to price / 3C trend confirmation to a negative intraday divergence today, especially toward the close. I ended up closing the entire position.
The 5 min chart makes the accumulation period very clear, it also makes clear that the size of the accumulation period is more than enough to support a move higher, however the EOD negative divergence suggested that MCP would see a pullback in the near term and I decided, rather than hold MCP through draw down in a very volatile and unpredictable period, I'd rather not have MCP acting as "Opportunity cost for the roughly $10k position size when those funds could be better utilized short term or at least are safe off the table.
The 10 min MCP chart shows distribution at the two parabolic-like spikes in May and accumulation in MCP starting earlier in June.
Remember how I said wherever the divergence first starts, even with lower prices as this is the way institutional money has to accumulate because of their position sizes, in my many years of 3C experience I've noted that the eventual reversal from accumulation will exceed the level in which accumulation was first noticed. Well that happened again (this is the 3rd example in the last few days), thus as long as the signal stays solid, I have faith in the indicator.
Again the size of the base here and I could make a case for an even larger base, is more than enough to make a much higher move as we expect generally and specifically with MCP as it has legs of its own outside of market correlation.
So I'll be looking for a lower price area with confirmed 3C accumulation of the pullback (which should be at least a fill of today's gap) to re-open at least the equity longs and perhaps the call position if the environment is favorable.
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