However, Marcus Stewart pulled a goal back from a corner and then Darren Byfield celebrated his debut by hitting the equaliser after 86 minutes.
"I thought we started very well," McCarthy said after the 2-2 draw.
"Ray Lewington was going mad next to me but then Watford scored a goal and could very well have had a second.
"They had plenty of shots and played extremely well but once we went two goals down to what should not have been a penalty I couldn't see us getting a point.
"I didn't think it was a foul, let alone in the box.
"Yet in a way it fired us up and we got a couple of goals back.
"I didn't think it was a fortunate point but we didn't deserve all three. I would have taken them though!"