Trade idea: MCP long

MCP recently broke out of a perfect inverse head and shoulders pattern and could be due for a fairly big upside move. Inverse head and shoulders patterns have a high probability of playing out successfully.

The first target for this trade is $72, at which point I'll sell half and put in a break even stop. The final target is 78, just shy of the double top.

I entered this trade just prior to posting at approximately 59.35, but anywhere near the dotted blue neckline is a good entry. I will stop out on a daily close below this neckline.

MCP inverse head and shoulders

Trade idea: TXN short

Texas Instruments (TXN) gapped down on July 11 and has since recovered, trading up significantly over the past week. If the stock fills this gap at 32.44, it should meet significant resistance.

In addition to a gap fill, this level also corresponds closely to a 61.8% fibonacci retracement and a previous pivot/area of congestion.

I'll look to enter this short trade on a break of the 32.44 gap fill area and will stop out on a daily close above the 50 moving average.

Trade idea: Allstate (ALL) Short

In the event of further upside in the market next week, watch ALL for a pullback at 29.50. The stock has been in a significant downtrend since early May and is trading below its 20, 50 and 200 moving averages.

The 29.50 level corresponds to a gap fill and is very near to a pivot low and a 50% fibonacci retrace. Should this level break to the upside, there will be strong secondary resistance at the 20 moving average and the 61.8% fibonacci retrace.

I will look to short ALL on a break of 29.50 with a stop above the 20 moving average.

ALL has strong resistance at the 29.50 level