Stock Trading Predictions & Technical Analysis: MGM

Friday, September 11, 2009

MGM - Shooting Star Formation (Top)

Today, MGM rallied and peaked at $12.59, before pulling back close to its opening price at $11.84 (opening price was $11.77). For my part my trailing stop order of $0.71 got triggered at $11.88, where I sold all my remaining shares. We can now observe a shooting star formation, which is the signal of a top. I expect to have a clear confirmation, most likely on Monday that MGM has indeed reached its top for this trend, and we should see a down gap. We can now expect a pull back, after such a run. Considering how much MGM has appreciated in value in just 7 sessions (~+63.00% from its bottom of $7.75), it's fair to expect a sharp down gap next week.
It's hard to say right now where MGM will find support. The only clear support is at $9.00, but this doesn't mean it will necessarily go as low as this. I'm also expecting to see the markets have a pullback next week, which will further fuel the down gap if indeed it occurs. The only way today's high wouldn't be considered the top, is if MGM hits a higher high next week closing higher than today (very unlikely, and rare scenario). However it is possible to have MGM close higher on Monday, while not hitting a higher high. The most probable scenario, that I'm expecting to see occur is a down gap on Monday with a lower high and lower low. We are also about to have a sell signal from the Stochastic parameter, where we have the stochastic about to cross down the signal line, which should occur on Monday. RSI has entered overbought territory, at a level higher than average before pullbacks. This is also positive sign, as you see more a stock enter overbought levels, the stronger the uptrend is. I think MGM will continue higher, but as things stand now, I suggest taking your gains and closing your positions, and wait for the next BUY signal.

Current Indicator: MGM - SELL

Trading Result: Approximate return: +30.00% in 4 days.

September 8th: Entered MGM Long Position @ $9.19
September 10th: Sold portion of shares @ $11.00
September 11th: Closed MGM Long Position @ $11.88

1 comment:

arkoSeptember 11, 2009 at 8:41 PM
As always, excellent analysis. Sold all but a small position today at $12. INtend to sell the rest on mpnday, hopefully at 12.25. C analysis was great too. Sold all at 4.65. Waiting for a gap down to under 4. Thank you once again.
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TECHNICAL INDICATORS

BUY SIGNAL: Indicates the possibility of the start of a new up trend or the continuation of the current up trend. This signal may be often given in the early stages of a potential new up trend that was preceded by a down or sideways trend. Such signals do not always succeed and may fail at time.

BUY: Indicates that the current up trend is already in motion and a BUY SIGNAL was already given earlier. A BUY does not necessarily indicate that the stock will continue higher from here, but simply that the stock is trending up. The further into the trend you decide to take a long position, the more risk you have of seeing it reverse back down sooner rather than later.

STRONG BUY SIGNAL: Indicates a stronger, more significant and reliable signal than a BUY SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG BUY: Indicates that the current up trend is already in motion and that STRONG BUY SIGNAL was already given.

SELL SIGNAL: Indicates the possibility of the start of a new down trend or the continuation of the current down trend. This signal may be often given in the early stages of a potential new down trend that was preceded by an up or sideways trend. Such signals do not always succeed and may fail at time.

SELL: Indicates that the current down trend is already in motion and a SELL SIGNAL was already given earlier. A SELL does not necessarily indicate that the stock will continue lower from here, but simply that the stock is trending down. The further into the trend you decide to sell a position, the more risk you have of seeing it reverse back up.

STRONG SELL SIGNAL: Indicates a stronger, more significant and reliable signal than a SELL SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG SELL: Indicates that the current down trend is already in motion and that STRONG SELL SIGNAL was already given.

HOLD: Indicates that traders who already hold this stock, should hold on as long as the trend persists. This signal is usually given during an up trend for which it would be considered too risky to take a long position at this point.

STRONG HOLD: Indicates that the current trend has been in motion for a while and rarely deviated away from the trend. Although the stock may continue higher, there may not be enough potential up side to trigger a BUY SIGNAL. This type of indicator usually means that the stock has very strong support levels which may have been tested but not broken.

WAIT: Usually given during a sideways trend for which we are waiting for a move that would trigger a BUY SIGNAL or SELL SIGNAL. This could also indicate uncertainty and the risk that would be taken if you were to take a long position at the current level. Taking a long position after giving a WAIT indicator is considered a gamble.