MGM, Dow Jones, NYSE - Sell Off Coming Tomorrow?

MGM

As you may have noticed today all world markets fell sharply lower with the announcement that Dubai World asked creditors for a standstill agreement on its massive $60 billion debt, sparking fears of default which exposes many banks in the world to more bad debt. Dubai World is one of the worlds biggest companies in terms of the amount of investments they make. They are in a partnership with MGM for which it owns 50% of it. Although MGM claims Dubai World has already fulfilled all of its commitments to funding City Center, I think it's fair to expect MGM potential face a big sell off as it also is just below a critical resistance level below the 50 day MA. If MGM does fall hard and below $10.00 it could fall as low as $8.00 to its strongest support level at its 200 day MA around $8.00.


Dow Jones

As I write this, the Dow Jone's futures are at -181 points, and based on the sell offs of all world markets today the Dow Jones could potentially experience a sell of -200 to -350 points tomorrow. Please note that this is pure speculation and these numbers are solely estimated based on today's average world market sell offs. The Dow Jones has the potential tomorrow to very quickly get back down close to its 50 day MA around 10,000. However, if we do get such a big one day fall an imminent STRONG SELL SIGNAL could occur in the event where the Dow Jones were to fall sharply by next week below the 50 day MA. On the other hand after falling off hard to the 50 day MA, the Dow Jones could simply bounce back up and continue back up along its major up trend.


NYSE

I decided to take a look at the chart of the NYSE which may be more relevant to where the market is or may be heading in comparison to the Dow Jones. My first impression by looking at the NYSE is that it is not looking as bullish as the Dow Jones. Despite also being in a strong up trend, the NYSE is starting to giving signs of a slow down in the uptrend and looks to be starting to trend lower. One big warning sign is what looks like a potential head & shoulders or triple top formation. Such formations cannot be confirmed until it moves below the neck, as on a few occasions it does continue higher and never fall below the neck. With that being said never act on anticipation. The moment it does cross down below the neck a target of the height of the head & shoulders is associated with the fall. By looking at the NYSE chart, a sharp fall below the neckline which stands around 6750 could send the NYSE back around 6000. There is some minor support also at 6500 and 6250 but I wouldn't expect them to hold after a fall below 6750. A fall back below 6000, below the 200 day MA could signal the start of a double dip recession that some analysts fear, and at this point it's hard to say where we may be heading, but I think another major crisis would be required to cause such a dramatic fall. With all that being said, we cannot assume than any of this will happen but only if it does fall off these critical levels how low it could fall.



Dow Jones - 2007

Please note that back in 2007 we could observe a head & shoulders formation with the Dow Jones which signaled the top and was then followed by the major sell off and recession.


Please note that I am not saying that any of this will happen, especially since we are a bit from these strong support levels. However, with a potential sell off tomorrow which may only be a one day effect, I felt that it would be important to point out to everyone what could potentially happen if this was more than just a one day sell off, and at what levels do the markets have to hold up to avoid a major move back down. As things stand right now, in terms of the Dow Jones the chart still looks very bullish and until any break downs happen, we have to assume that the up trend will continue and is currently still intact.