Below is today's chart, complete with huge 3rd of 3rd gap. I'm looking at the screen right now and it says up 78%. The good news is that EW clearly predicted this move. The bad news is that my gap fill trigger never when off so I did not double down as I had hoped to. Still, since my documented buy price is .36 based on my wave count, nobody's complaining.
So now, for the benefit of those who think that news is the real driver of short term stock moves, let's step back calmly and consider the facts. MCP was sold into the dirt because of growing losses on structurally low commodity prices for rare Earth metals. China had cornered the market and things looked so bleak that MCP issued a going concern notice. But the wave count indicated that a bottom was neigh and so in order to prove how count trumps news, I blatantly ignored the going concern notice news and bought a small position that I would treat as a non-expiring call option.
Looking back, I missed the exact bottom by 4 cents simply because it was a momentary spike, very low volume. Some people will still think this buy decision was just dumb luck but I documented the count carefully enough so that any thinking person can see that it wasn't gut feeling or blind luck that drove me to the buy decision but rather the EW count. In other words, it was a thoughtful assessment of the odds (as I interpreted them through the wave count) for placing a bet. Importantly, I freely admit that nothing was certain at that point and this is what charting naysayers have to get through their heads. It was and is and always will be about playing the odds because you get no certainties when gambling which is all that stock market "investing" ever was, is, or will be. EW is a model based odds-enhancement tool, not a crystal ball.
In any case, we then got a big move up into 1 or a, another move back down to the 50 fib which I clearly modeled to be a normal EW wave 2 or B pullback and then today's monster percentage gain which took exactly the form that my model predicted. Most people will read the news and say "OMG, Siemens just selected MCP for a 10 year rare earth supply contract" and attribute this admittedly hyper-positive news to the share move. But the fact that my EW model predicted this in advance simply cannot be ignored by naysayers of chart analysis, especially the most powerful form of technical analysis which IMVHO is Elliott waves.
Clear thinking people will have to admit that this sequence of posts by me is good evidence that past chart moves predict future moves before the news. I guess you might say that the chart predicts the news. I think what it really shows is that insider trading is alive and well and that this Siemens deal did not just materialize in 1 day. It has been an ongoing negotiation and corrupt insiders have been accumulating into weakness for the day that the shorts would get burned at the stake. This activity showed up in the charts in a way normally attributed to herding movements. Even insiders are part of the herd...
It remains to be seen if this is just going to be an a-b-c move but I think not. I do not disregard the positive nature of this Siemens contract. I do not think Siemens would enter into a long term agreement with a company which will eventually not have access to credit needed to restructure the debt associated with its materials processing acquisition. I also know that much of China's raw materials production is unprofitable and funded by debt. As China's growth plummets it will have no choice but to shut down some of its supply creation and that should be positive to global prices.
Because of this I will continue to hold MCP until we get 5 clear waves up at which time, yes, I will sell for the a-b-c to the prior 4th because of the large percentage moves occurring here but I will be looking at that point for a re-entry point. Failing that, my stops are at 0.62 since wave 4 should not fall back into the region of wave 1. Look how the 3rd of 3rd gapped above the top of wave 1. So I think that is a very clear stop level for this trade.
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