After announcing MGM was a STRONG BUY CONFIRMED after staying above its 50 day MA for a 2nd straight session, I believe I misread that. Although MGM did close for 2 straight sessions above the 50 day MA, it only stayed above it yesterday only. What I mean by this is that despite closing above the 50 day MA on Tuesday, it did trade below it during that day. To actually have a STRONG BUY CONFIRMED which I mistakenly gave yesterday. MGM would have needed to trade above the 50 day MA again today which it obviously failed to do. Although MGM fell hard today, it was indeed in a SAFE BUY ZONE. Like I mentioned yesterday, a fall below $11.50 only was required for MGM to get a SELL SIGNAL. In fact after crossing down the 50 day MA below $11.50, MGM fell as low as $10.86 before bouncing back up above its support level of $11.00 and close at $11.23 while still remaining below the 50 day MA. If you would have taken a long position yesterday at the closing price of $11.84 and set a stop loss order of around $11.40 below the 50 day MA level of $11.50, you would have taken a loss of only -3.71%, rather than find yourself in a loss of as low as -8.27% according to today's low of $10.86. This shows again how important it is to always set stop losses for all your stocks after you take a long position. As you can see for my long position I avoided a much bigger loss than I could have suffered from without a stop loss, and instead took on a minor loss. Today's move of MGM was a perfect example of what is meant by my SAFE BUY ZONE signals. A SAFE BUY ZONE doesn't mean the price will start moving higher from here because of strong support but rather that a short fall would be required for it to give us a SELL SIGNAL and potentially move lower like it did today with MGM. The stochastic has also given us a SELL SIGNAL today with a cross below the signal line.
Now where could MGM go from here? Right now, it's a little early to say, but MGM could start trading sideways, while flirting with the 50 day MA like it did in the last 3 sessions including today. However, MGM did break its up trending channel line today while remaining above the major down trending channel line. If MGM does not manage to hold above the $11.00 level, its next support is at $10.50. A move below $10.50 could potentially give us a STRONG SELL SIGNAL with the risk of falling back into its previous major down trending channel. To get a BUY SIGNAL again from MGM, it now needs to not only manage to trade above the 50 day MA for two straight sessions but also to cross sharply and close above the $12.00 level. For those like myself who were already long MGM, selling is probably the best option to not risking to take on a bigger loss. If you are looking to go long, I would wait for the next BUY SIGNAL.
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