Stock Trading Predictions & Technical Analysis: MGM - Moves up and stays above its 50 day MA

Wednesday, November 18, 2009

MGM - Moves up and stays above its 50 day MA

MGM - STRONG BUY CONFIRMED - SAFE BUY ZONE

Today MGM moved to as high as $12.15 before pulling back but still closing up at $11.87. MGM is now a STRONG BUY CONFIRMED since it managed to continue to move higher and remain above its 50 day MA without touching price points below it. Anyone taking positions from this level should set stop losses below the 50 day MA which currently stands at $11.50. For my part today, I had set a $0.25 VTSO for MGM which got triggered and sold my position at $11.90, cashing in an approximate gain of +7.00% in 2 days. However, after seeing the price move lower while staying above the 50 day MA I re-entered into a new position at $11.77. The purpose in doing this is that I did not want to risk more profits than I already had, and in fact this allowed me to re-enter into a new position at a lower price point that I sold off my last position. It's important to lock in gains when you have them, but obviously it's easier to do so when you have access to VTSO like I do, rather than having to adjust manually your Stop Loss orders. I consider MGM to not only be a STRONG BUY CONFIRMED but also to be in a SAFE BUY ZONE. The reason I believe this is because MGM's closest support level appears to at its 50 day MA at $11.50. Therefore if you take a position at the current price of $11.87 and set a Stop Loss order below $11.50 of let's say $11.40, you would only be risking -3.95% before having a SELL SIGNAL. This leaves you more room to wait and see if MGM goes even lower to have a more robust SELL CONFIRMATION, without losing more than -7% or -8% which I believe wouldn't be necessary to take on. For my part I have set a Stop Loss order just below the 50 day MA, as I don't believe it to be necessary to wait and see fall down more and lose more money to get a clear SELL SIGNAL. In fact if it does fall back below the 50 day MA, you can expect MGM to fall back to $11.00 or $10.50 before having any significant support. With that being said it would be smarter to sell before and get back in when the price bounces back up. If the price does continue higher MGM's next resistance levels are at $12.50, $13.00, and $13.75-$14.00.

MGM - LONG

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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.