MCU

[calven]

Nice risk reward with this small cap 1$ stock. Breakout above 1.60

GO long on a break of the top resistance line. (1.60)

Would appreciate some input from you folks..thanks  

GL -cal  

[mads888]

Great find Calven. Applause to you. The "Corporate Highlights for the Quarter" mentioned in the following news looks very promising.
http://biz.yahoo.com/bw/060110/20060110005968.html?.v=1

Like you said, if it breaks out of the resistance, it should be interesting to watch.

Once again, thanks a lot for the great find.

Thanks,
mads888

[calven]

BOOOOOOOOM!!!!!!!!!!

Anyone else get in this one with me??

Disclosure: 2k at 1.61

[LuckyFish]

Calvern,
You sure know how to pick them!
Great pick and t/a.
Thank you,
Brigitte

[fous]

Nice pick Cal, Breakout on above average volume. Looks great! Applauds

-fous

[Deadb440]

I've been in MCU for a couple of years now and it's never looked better.  Expect a very strong move on the Pharma news and then a significant pullback based on the Fibonacci Lines.

[statement00]

Hey, I was wondering if you guys were still in? I'm still in from a couple days ago. It pulled back today but looking at the chart below, depending on where you draw the top line (I drew mine descending with the 3 tops, not straight across around 1.60), it looks like it closed above it. Also it looks like it may have some support around 1.50. I think I'll continue to hold as long as it closes above the bottom support line. Any opinions are appreciated 

[calven]

Im still holding... would like to see the bottom support trendline hold. Should MCU break that Ill run for the exits...

[Melf Elf]

Any opinions are appreciated

Statement00,

My buddy, Calven, and I have "agreed to disagree" about what is and isn't an Ascending Triangle.  

In my opinion, one of the difficulites that you're having is that you're trying to force an Ascending Triangle on the chart, where one doesn't exist.

Right off the bat, you're ignoring the December 5 candlestick, which not only was the high on the chart prior to March 2, it far and away was the heaviest volume day on the chart.  In my opinion, we can't choose to ignore that, and start drawing trendlines somewhere else.

Patterns begin at a high or a low.

The high on the chart was December 5, so you begin there to see what pattern emerges, if any.  I'll walk you through it from there. (You might want to scroll down and look at the chart first).

1. December 5 was a high.  Put a #1 there.

2. December 15 was a low.  Put a #2 there.

3. December 27 was high.  Put a $3 there.

4. January 9 was a low.  Put a #4 there.

Now connect the two highs and connect the two lows, and see what you've got.  The slope of the trendline connecting the two highs is much steeper than the one connecting the two lows to be a Bull Flag, so it's a "possible" Bullish Falling Wedge.  

We can connect any two data points on a chart, but that doesn't mean that it's going to have any significance.  A third hit to trendline give us validation from the market that it's important.

5. The January 13 high tagged the upper trendline within less than one penny.  That's a trendline validation, and it also validates that we've got a Bullish Falling Wedge formation in progress.

6. From the high of January 13, MCU sold off to a low of 1.37, which will become important in a minute.

7. February 7, we get a an upside breakout of the Bullish Falling Wedge, but the volume only was 34,000 shares.  That turns out to be a "false breakout" (the stock goes back into the pattern).

8. After a "false breakout," we're left wondering if it's going to fail completely, and wondering how much risk we should take.  For a stop loss, I like to use a cliose below the low, prior to the "false breakout."  The low of January 26 and January 30 both were 1.37, so the stop is a CLOSE below 1.37, or an obvious tank below that price.

9. February 14, MCU printed a low of 1.34, below our stop, but it closed at 1.38.  That's a tough one because four cents in a stock at this price represents 3%.  It's a judgment call, whether to stop it out when MCU printed 1.36...1.35...1.34.  But, at the close, the trade was alright.  

We have the benefit of hindsight though.  I've gotten stopped out on a few of those, only to find out at the close that I would have been alright holding.  Other times, I've been very glad that I sold because the stock seriously tanked after I sold "an obvious tank" in progress.

10. February 17, we got another breakout above the Bullish Falling Wedge, but it also was weak.  68,000 shares.  Five days of consolidation followed the breakout on weak volume (weak volume is okay during consolidations).

11. March 2, a rally to 1.72 on 317,000 shares.  That's very good volume for this stock, but the volume on December 5 was 3,207,000 shares, or 9 times the March 2 volume.  

That would at least partially explain the selloff in MCU the past three days (general market weakness certainly is a factor, too).  But, the stock has a supply of sellers from the December 5 "Gap To Crap."  The stock opened at 1.70 and closed at 1.43, a 16% loss for anyone who bought the "Gap To Crap"  opening, and there were quite a few of them, given the heavy volume that day.

You see why I say that we can't just choose to ignore that candlestick.

12. With the rally to 1.72 and the subsequent selloff, we NOW have an Ascending Triangle (pattern in purple). Bullish Falling Wedges are notorious for "morphing" (changing) into Ascending Triangles, or Bullish Inverse H&S patterns, by the way.  

The tops of the Ascending Triangle pattern are flat at 1.70 and 1.72.

The ascending line begins at the low of the Bullish Falling Wedge (#4 on the chart), not where you've started it.  You began the ascending trendline at a place that isn't meaningful.  It's not a part of the patterns that are IN PLAY.

MCU closed yesterday at 1.55.  You've got "stacked" support below here:

1.44 - the 50DMA
1.42 - the Ascending trendline
1.41 - the Descending trendline (from the Bullish Falling Wedge,,,in blue)

You might be in for a test of that 1.41-1.44 support.

The top of the Ascending Triangle is 1.70-1.72.  You want to see a print of 1.73.  To derive the pattern target, I always use the lower, more conservative, of the two (or more) highs:

1.70 - 1.20 (the low of the Ascending Triangle pattern, at #4) = 0.50 points.

1.70 + 0.50 points = Target: 2.20 IN PLAY, which would represent almost a 30% gain from the breakout.

I hope you guys get it.  Good luck!

[Melf Elf]

You've got "stacked" support below here:

1.44 - the 50DMA
1.42 - the Ascending trendline
1.41 - the Descending trendline (from the Bullish Falling Wedge,,,in blue)

You might be in for a test of that 1.41-1.44 support.

Interestingly, on the Ichimoku Kinko Hyo chart, the Kumo (Cloud) is totally flat, at 1.43.

That "should" offer further support on any selloff.

I agree with Calven.  If all of that "stacked" support fails, I'd look for the exits.

[Melf Elf]

Sorry if this is a double post, but it didn't look like the chart showed up.  Try again...

[calven]

Not only am I playing the ASC TRI but also the fundamental reasons behind this...the only thing I really need to know is that somebody bought a TON of shares on that 3 million share volume day.  Given the fact that institutions own just 5.8% of MCU I suspect insiders were behind it.

Given the fact that the average holding price for MCU is 1.43-1.50 as shown with price by volume bars ,  I strongly suspect MCU will rebound off those levels should it test. The fact that MCU popped to 1.70 on absolutely nothing news related tells me it is "eager" to move higher...Although I am down on my 1.61 entry I am not the least bit worried. When we are south of 1.42 I will begin to think about dumping the pos.

As far as the debate on whether or not this is/was an asc triangle - we each have unique opinions. I do see where you are coming from with the volume day hitting 1.70 - definate resistance there. Hoever I also see definate upsloping support and a fairly reasonable neckline top...

In reality, this play is not so much about the pattern as it is the possibility of a news release and the ongoing trend.

Keep in mind that 68,000  or 80,000 shares is NOT a weak day IMO. That 3-4 million share day and   few days thereafter raised the AVE daily volume quite a bit...

Although yahoo quotes AVE DAILY VOL at 110,000 I would venture to guess 50k is more appropriate...business week.com shows 66k as ave (trailing 30 days)....but even that was tainted by the big pop day.

The 300k "false breakout" touch of 1.70 was very tricky... it would appear to be 4 x  ave daily volume (using 66k) from my prespective. (especially when most of the 300k came before noon- meaning I was thinking it would end near 500k + by days end) Maybe you can understand why I posted the (now false) "breakout chart".

[Melf Elf]

As far as the debate on whether or not this is/was an asc triangle - we each have unique opinions.

calven,

Agreed.  That's what makes a market. 

Given the fact that the average holding price for MCU is 1.43-1.50 as shown with price by volume bars ,  I strongly suspect MCU will rebound off those levels should it test

Yeah, there's "stacked" support at the lower end of your volume bars, 1.41...1.42...1.43...1.44.  I would expect that to hold, too, and like you said, I'd look for the exits if it didn't.

Good luck.  Hope you make lots of $$$ on this one.

[statement00]

Calven and Melf Elf,

Wow guys, thanks a ton for both your opinions. I'm still learning and its discussions like this that help a lot. Also the fact that people can disagree and still carrying on respectful, helpful discussions is something I haven't found on many sites. As soon as I reach the point where I can applaud people, you 2 will be the first to get it (well maybe fous too lol) because you always explain your plays very well.

As for the stock, I'm with you 2 about the support, I'm holding as long as the stacked support below holds. Thanks again guys. 

[calven]

Strong bull close today.... hit 1.63 for a few moments and closed at 1.61. Now volume needs to pick up and we need one more bullish candlestick.