Stock Trading Predictions & Technical Analysis: MGM - Crosses sharply down through its 50 day MA

Tuesday, October 27, 2009

MGM - Crosses sharply down through its 50 day MA

MGM - STRONG SELL SIGNAL

MGM has given us a STRONG SELL SIGNAL today with a sharp move below its 50 day MA. MGM had been steadily holding up over its 50 day MA, ever since it crossed back over in mid-July. This is why today's move is very significant on a negative point of view. Something that was true for the last 3 months is not anymore. This STRONG SELL SIGNAL may be confirmed tomorrow if it stays below $11.00 and its 50 day MA. Although, I think there is a strong possibility that MGM will move higher tomorrow, I don't see it having a huge reversal and move back up over $11.00 and its 50 day MA. However, MGM being such a high beta stock, I would rather wait to see it trade two more days below $11.00 before confirming the STRONG SELL SIGNAL. However, if it does get confirmed this would mean that MGM may potentially trade within a lower range. Right now it can simply be around today's levels of $9.50 to $11.00. But any move lower and crosses down through the next support levels could make the ranger either wider or simply lower within these lower support levels. A move below $9.50 will send MGM to $9.00, a move below $9.00 could send MGM as low as $7.50-$8.00. Basically a STRONG SELL CONFIRMATION would mean MGM will most likely be trending downwards, and has more potential of hitting lower prices than higher ones. This simply means that a door that had been shut for the last three month (the prices below the 50 day MA) is now open, despite no guarantee it will happen, but it now has the potential to. The stochastic had given us also a SELL SIGNAL a few sessions ago, however it is currently in oversold territory and lower than it ever was in the past three months. This leads me to believe that even if MGM is down hard and may move lower, it shouldn't be long before seeing any bounce back. However another possibility is seeing MGM move strongly back up in the coming days, where there could possibly be a double bottom, and that's why I would preferably wait a couple days before confirming any STRONG SELL. This may turn into a buying opportunity with bounces back up. Right now we have to wait for more guidance.

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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.