The Wanderers boss claimed the game could have finished with even more goals after Chris Iwelumo, David Jones and Micky Gray scored for the division's second-placed team.

The home side replied through Grzegorz Rasiak and John-Joe O'Toole but missed a penalty in the second half and saw the visitors twice clear off the line.

"There was some rubbish defending, rubbish finishing," said McCarthy. "It could have been 6-6.

"I thought there were some very strange decisions and the penalty got what it deserved by being blazed over the bar because I don't think it was one.

"If his is one, Chris Iwelumo's in the first half when it was 1-0 is an absolute stonewaller. That all said, it was a highly entertaining game."

McCarthy disagreed with his opposite number, Adrian Boothroyd, who claimed keeping clean sheets was the only way to guarantee success. Wolves have conceded 14 goals in their last five games.

"We had 19 clean sheets last year. We were second best I think and we finished seventh," he added.

"We conceded far less goals than (last season's champions) West Bromwich did... so I think scoring goals is the real thing, but then I'd like to keep a clean sheet and I'm sure Aidy would."

Boothroyd had "mixed emotions" after seeing his side fail to convert more of their chances, with Tommy Smith blasting a second-half penalty over the bar.

He said: "I'm pleased with lots of aspects of our play, pleased that we dominated a very good team - who are at the top of the league - for long periods, and obviously thoroughly annoyed at the way that we conceded the three goals.

"I would love to have a frugal team but at the moment we are giving presents away. It's alright being entertaining and scoring goals, which is lovely and what we all want to see, but at the same time I think we all know that keeping clean sheets is what wins things and what wins championships and at the minute we're absolutely miles away from anything like that."

McCarthy's men, looking to bounce back from Tuesday's 5-2 drubbing at Norwich, took the lead after just 57 seconds. Sylvan Ebanks-Blake's knocked a long ball on and Iwelumo steered the ball past Watford goalkeeper Richard Lee.

The home side battled back into the contest, though, and got their reward after 21 minutes when Carl Ikeme could only parry Will Hoskins' tame drive from 25 yards. Rasiak ran in and knocked the ball over the line from two yards out.

Wolves restored their advantage six minutes before the break when Watford's Leigh Bromby fouled Iwelumo 25 yards from goal.

Jones stepped up and bent a stunning left-footed free-kick around the wall and just inside the post.

But the Hornets needed just a minute and a half of the second period to get back on level terms. Smith floated in a wicked free-kick from the left and O'Toole met it with the faintest of touches at the far post to make it 2-2.

The Hornets were then handed a golden opportunity to lead for the first time as Jones brought down O'Toole in the box on the hour mark, but Smith blazed the ball spectacularly over the bar.

Wolves made Hornets pay for their wastefulness after 71 minutes when Bromby failed to deal with Michael Kightly's ball from the right and Gray stole in to put them ahead.