Today both MGM & LVS have rallied, and I finally decided to go back long to MGM, after seeing it breakthrough some key resistance. MGM flag formation, which I though was close to fail, managed to stood up and remain above its major key support just above its 200 day moving average. MGM has rallied back the last few days, making the flag formation very close to being confirmed. Finally today MGM has broken through resistance and is in the $9.00s. I did say last week that I was looking to go long LVS, but I finally opted for MGM because it's a stock I know well, and now that it has broken through its resistance level around $8.75, MGM could be heading to $10.50 in the short term, possibly within days. This flag formation, once confirmed very rarely reverses. If you see MGM stand its ground tomorrow, it will be safe to go long. I tried to anticipate this confirmation today because I feel very confident that this formation will be confirmed tomorrow. I expect to see MGM hit at least $10.50, before it starts settling down again. I keep leaning back towards MGM particularly because we are getting closer and closer to the month of December when the City Center is expected to open. LVS is possibly and most likely as strong as MGM, perhaps more stable, and also gives huge potential returns. In fact LVS is still trading in a strong up trend today, and is up as much as MGM. However I believe for the short term (within the coming months) that MGM could outperform LVS, despite the strong positive correlation between both. MGM still has more ground to catch up with, which it lost in the last 2 years. To officially confirm MGM's flag formation, MGM needs to remain above $9.00, at its breakout level tomorrow. A bearish signal and possible reversal, would be if MGM filled the gap tomorrow and falls back below $9.00. I went long MGM today because I'm anticipating to see it hold up.
Current Positions:
Long MGM @ 9.19 - Stop Loss: $8.61
Long AUY @ 10.28 - Stop Loss: $9.63
Short BAC @ $16.96 - Stop Loss: $18.02
Yoel, what do you think about C? Today I sold all my shares, which would be a new entry point?
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(Check my last post with a copy of this message and charts) I think selling all your shares of C today was a great call. There seems to be a diamond top formation, which is one of the hardest formations to observe. One of the criteria of the diamond formation is having C's volume remain strong which is the case. Also the 200 day moving average is flattening out which further fuel that this is indeed a diamond formation. This diamond top indicates a reversal to a downtrend. The shorter the pattern the more quickly C should move down to its price target. Right now I'm observing 3 support levels at $4.00, $3.75, and $3.25. I think it's fair to assume C could pullback around $3.75-$4.00 with 1-3 weeks. The diamond formation is very likely to be confirmed tomorrow, if we have another down gap. Also, an engulfing pattern occurred today. This pattern occurs when after a small gap down, you have a big down gap the next hitting a higher high, but closing at a lower low than the previous day. This is also an indication of a top. In conclusion, I think C will breakdown very soon, possibly tomorrow and start trending back down. In terms of a new entry point, I always like to wait on a day to day basis for the next signal. But a very likely scenario is seeing C pullback down to around $3.75-$4.00, which if it manages to bounce back from these levels and strengthen its support, would be a good entry point.
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