Where is MGM headed? Short term price target $11.00
If you look at the first part of the graph, you would short MGM as it was trading lower in a channel. It then had a negative breakout (a break in the price, lower, which indicates the share price may be heading even lower. MGM then broke out of it's negative channel,
bottomed, and started a new trend upwards in a bullish channel, when prices starting having higher highs. This is when you should havebought MGM, as long as it was trading within this channel range. Now we are at the Holding stage, where MGM has started trading sideways within a new channel (between $8.00 support level, and $9.00 resistance level). If MGM falls below $8.00 and breaks down through this support level this would be a sell indicator, if it breaks through $9.00 and breaks through this resistance level, it would be a buy indicator. Keep in mind that to officially confirm a new pattern, the share price should remain either under or over these levels for 2-3 day. Now, I'm betting that MGM will break though this resistance
level of $9.00, because I can observe a flag formation. However, this can only be confirmed once the breakout through $9.00 occurs, if it goes the other way I will sell my shares and take my loss. I've placed an $11.00 short term price target once the breakout occurs, because the length of the pole is of $2.00 ($9.00-$7.00); therefore $9.00+ $2.00= $11.00
How are things looking today? Not so goodToday, I think it's safe to say that MGM will not be heading to $11.00 for now, as it broke through its support level of $8.00. MGM may continue to trend lower within this channel, and remain just above its 200 day moving average. If it breaks its 200 day moving average, MGM could head back to $6.50-$6.80, which I would consider very cheap. Long term MGM, like most stocks are heading higher, I see this pullback as an opportunity to get some cheap shares. MGM is a very volatile stock with a high Beta, and things can change very quickly. I would not suggest that the moment you see MGM near $6.50-$6.80, to jump on those shares and buy them. But I would rather wait for the next signal, or any sign that it started to trend up, even if it means leaving some gains aside. It's better to be safe than sorry. So if MGM, heads back to these levels I would watch carefully everyday for any signs of a bottom, before going back in. MGM is one of my favorite stocks, and one of those I know best. I will often be in and out of both BAC & MGM. I successfully predicted MGM's pop back in April, when I saw a pennant formation, and cashed in my biggest gain ever of exactly 100% in a few days or weeks. I will be making another post later about what led me to successfully predict almost exactly where is MGM was headed, both bottom and top.
Yoel,
ReplyDeleteI had read your first prediction on MGM and invested some with a price target of 11.00. Now looks like the flag formation has failed, I guess it would good time to buy more and average down the cost.. I guess. BTW, I m going to go long with MGM too.
Thanks,
Before starting averaging down, I would rather wait for the next signal, or any sign that it started to trend up, even if it means leaving some gains aside, and buying some shares at a slightly higher price. Ideally it would be nice to see MGM break up over the channel it's currently trading in, but you may not get the chance to buy your shares much cheaper then. I usually don't like averaging down, but average up. If you are making losses in one of your positions, I would usually cut my losses to -7% or -8%, and wait for a better time to enter.
ReplyDeleteYoel, what do you think about JPM? I bought it avg 42.80. I think it´s a good stock but today it continued going down. I wonder if it is time to cut muy loses or wait until your 7% that would be 39.80.
ReplyDeleteThanks
JPM is at strong support level at just under $41.00. If the price bounces back up tomorrow, this will be a bullish signal and JPM will have solidified its strong support at this price. However, if it goes under $41.00, the next support level would be at its 50 day moving average at $39.00. I would consider selling my position if you see a big down gap tomorrow, or if you are willing to take that risk you can wait and see if it breaks $39.00 before selling. Limiting your loss at 7.00% or 8.00% is the safe way to play it. However considering the price at which you bought JPM you may get whipsawed, meaning that the price may bounce back at $39.00, which will not give you another good opportunity to get in cheaper. So you should decide among these scenarios what to do. But I would play it safe. The best thing to do I believe is to set a stop loss of 7.00%. Even if you take a loss, you will have not taken the risk of taking a bigger one. I think JPM is more likely to fall than rebound.
ReplyDelete