STRONG SELL (major trend monthly)
MGM gave us a BUY SIGNAL today after strongly bouncing back up, however the major trend is still down. Despite that, I expect MGM to at least move back up towards $11.00 and its 50 day MA, giving it a short-term potential return of 10%-15% before falling back again, if the down trend persists. A reader of this blog did ask me about MGM, and I was myself hesitant towards taking a position with MGM, but I finally did. I went long at $9.82, but have set a tight Stop Loss order around $9.15 assuming the BUY SIGNAL fails. However, I will be watching MGM like a hawk with any moves upward, when it gets near $11.00 and its 50 day MA. If I see any signs of a pullback then, if it does indeed reach these levels I will immediately sell my shares, because this would indicate that the down trend will continue. However if MGM does start to go strongly over $11.00 and $12.00, the trend will most likely be broken and the potential returns could be much higher than 10%-15%. In the end I decided to take a position with MGM because in the short-term (1 week) there is more potential upside than down side. Note that MGM is still a SELL based on its major down trend. So, if you are looking to be very short term like myself right now we have a BUY SIGNAL, that could very possibly pullback at the end of next week or the beginning of the week after. Please also note, that I will not bother making an analysis of LVS, because it will be the same analysis with simply different price levels. MGM & LVS are very strongly correlated and their charts are almost identical. Going long MGM or LVS could potentially give you approximately the same returns. Keep in mind that MGM will be announcing its earnings report next week on November 5th, so there is sure to be a lot of action. I think that after the earning report MGM could either have a huge fall or a huge break upwards, there is no way to predict. However, keep in mind that WYNN's results did dissapoint this week and that is why all casino stocks have been down. If the results of MGM are dissapointing I may sell all my shares in the after-hours in the event where MGM starts to fall strongly. So, be sure to watch MGM very carefully since this is a high Beta stock, moving very fast, which can give you huge returns or huge losses if you don't set stop losses. I've repeated it many times and I will repeat it again, you must absolutely, ALWAYS set a Stop Loss order or you will easily lose a lot of money, especially with high risk stocks such as MGM. Please note that MGM's previous STRONG SELL SIGNAL is based on the fact that MGM crossed its 50 day MA a couple of days ago, and did stay below it. This signal is still valid based on the major trend (monthly). The current very short term BUY SIGNAL is based on a potential weekly move, but could very likely pullback near $11.00, when the STRONG SELL will remain valid.
Long MGM @ an average of $9.82 - Stop Loss @ $9.15
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