MGM - Strong Reversal

MGM - BUY

After pulling back as low as $11.36 today at its 50 day MA, MGM strongly bounced back up to trigger a BUY SIGNAL as it recovered all of the past days' losses. MGM closed higher today at $12.52 on strong volume and has now formed a Bullish 3 Method Formation which is a continuation pattern of the current up trend.

"The psychology behind this pattern is relatively simple. The first candle represents strong impulsive buying with high volume. The consolidation bars do not show any real selling but conversely allow longs to buy more of their positions while the stock drifts lower. Finally, when the longs are done accumulating their shares, the downward pressure is released and the stock is allowed to go higher, above the first candles high." (source: http://www.mysmp.com/technical-analysis/rising-and-falling-three-methods.html).

"The Rising Three Methods bullish continuation pattern occurs in a bull market, where during an uptrend the market rests before resuming the trend. The bullish trends break is reflected by small candles that all stick to a strict market range formed by the aggressive move on day one. A typical explanation for this type of formation might that the market is slowly digesting the relatively large moved reflected by day one." (source: http://www.fxwords.com/b/bullish-rising-three-methods-candlestick.html).

"Bullish rising three methods pattern is considered as a highly reliable trend continuation pattern. Reliability of the pattern increases with shortening of real-bodies (doji formations) of middle candlesticks and decrease in trading volumes of middle days." (source: http://www.nobletrading.com/blogs/2009/01/bullish-rising-three-methods-pattern.html).

I now feel very optimistic of seeing MGM finally going over $13.00 this week and perhaps as early as tomorrow. I feel a breakout on the up side for MGM is now imminent. As mentioned in earlier posts, a closing above $13.00 will trigger a STRONG BUY SIGNAL at which time we may see it move towards $17.00 and $22.00.



LONG MGM

MGM - Shooting Star Top Pattern

MGM - SELL SIGNAL

Today MGM moved as high as $12.67 before pulling back down and closing slightly down at $12.26. As a result of this we got a minor SELL SIGNAL as we can now observe a shooting star top pattern which indicates that MGM should continue pulling back lower tomorrow. MGM gave up all its gains today and closed down below its opening price which is always a bearish signal. Keep in mind that MGM's major trend is still up and will remain so as long as it trades within its up trending channel. Going into the next couple of days MGM is looking to move back towards $12.00 and perhaps as low as $11.65. What is important for MGM is to remain above these levels to maintain the up trend. I personally sold my position today at $12.26 cashing in a minor gain and I am looking to get back in perhaps tomorrow or the day after around the levels I mentioned. I personally chose to take the safe path with MGM as it is a very volatile stock. Before getting back in I want to wait and see if MGM manages to bounce back up from one of these level ($12.00 or $11.65). One possible scenario is seeing MGM move back lower towards these levels to then bounce back up and close higher. Although unlikely for tomorrow, they may even be a minor chance of seeing MGM close higher after hitting lower lows. If MGM breaks the $12.00 support level tomorrow I will be looking to getting in close to $11.65, only if it bounces back up first. Some people may ask that if MGM is still in a major up trend why should you not just hold MGM into tomorrow or the upcoming days? The answer is simple, there is no way to know if the shooting star pattern indicates a top for the major up trend or the recent 2 day minor up trend. MGM could break below $11.65 and then the door will be opened to move back towards its 50 day MA around $11.31 and even towards $10.00-$10.50 if it breaks the 50 day MA. If MGM manages to stay above $11.65 and $12.00, I believe this pullback may not last more than 1 or 2 days before MGM bounces back up. In the event where this shooting star SELL SIGNAL were to fail tomorrow and that MGM would just jump higher without hitting lower lows, I would wait and see if it manages to break $13.00 before getting back in. Like I mentioned in my previous posts if MGM jumps above $13.00 and closes above this level this would trigger a STRONG BUY SIGNAL. Right now what I expect to see happen, which is the most likely scenario is seeing MGM pullback as low as $11.65 or $12.00 to then resume the up trend and move closer again to $13.00 in the following days where the ultimate test will be.

MGM - Breaking through Resistance

MGM - BUY


After reversing back down yesterday to almost exactly its daily 50 day MA ($11.19) MGM managed to bounce back up and close at $11.38 yesterday. This was a bullish sign despite a failed SELL SIGNAL that was triggered by the Stochastic yesterday. Today, MGM moved back strongly higher and broke the $12.00 resistance level by closing near the highs of the day at $12.30 (+8.08%). The continuation of the current up trend is promising as MGM moved up today on stronger than average volume which is required for MGM to continue moving higher. Those who took a long position with MGM after seeing it bounce back up its 50 day MA are in comfortable position. MGM is now trading in an up trending channel indicated by the two blue parallel lines on the chart. For those who may want to get into MGM at this point, I would suggest that you WAIT and see what happens tomorrow. There are several possible scenarios:

1) WAIT: MGM continues higher towards $12.50, $12.75, or $13.00. If MGM breaks $12.50 it should manage to move towards $12.75 and $13.00. Buying around these levels would be too risky due to the very strong resistance level at $12.75-$13.00. If that occurs I would rather WAIT and see if MGM manages to break above $13.00. If you were to take a long position before that happens, there will be too much risk of seeing MGM reverse back down.

2) STRONG BUY SIGNAL: MGM breaks above $13.00. If that happens, this would trigger a STRONG BUY SIGNAL for which there would be a strong potential for MGM to continue to shoot up higher towards the $22.00 target price as I indicated in my last post. Please note that for a STRONG BUY SIGNAL to be confirmed it is preferable to see if MGM can manage to stay above $13.00 for a day or two, and then take a long position. However, MGM being such a volatile stock with a high beta may make you lose a lot of up side if the STRONG BUY SIGNAL is confirmed. With that being said if MGM breaks above $13.00 and you believe that it will manage to close above this level on that day, you should take a long position then.

3) BUY SIGNAL: MGM pulls back towards $12.00 and bounces back up. If this occurs this will be a confirmation that the previous $12.00 resistance level is now a support level. If this happens tomorrow, taking a long position will be considered a safer bet. Even if you end up buying around the same price as you can buy it now, this would be an indication that there is less chance of seeing the $12.00 level broken any time soon, and MGM may indeed continue higher.

4) WAIT: MGM moves back down and closes below $12.00. If that happens, this doesn't mean MGM will necessarily start trending down, but simply that you may be able to get in at a cheaper price. If that occurs MGM closes support level is around $11.60-$11.70, and a bounce back up from this level in the following day or two could be a good entry point.

5) HOLD: MGM breaks below $11.60. If that occurs MGM could be heading back towards its 50 day MA which is currently around $11.25. However, at this point taking a long position with MGM wouldn't be very interesting as it may start trading sideways for a while.

6) STRONG SELL SIGNAL: MGM breaks below its 50 day MA. If that happens, this will trigger a STRONG SELL SIGNAL as the ascending triangle pattern will be considered to have failed as MGM would very likely head back towards $10.50-$10.00.

Among these scenarios, the most likely ones to occur are scenarios 1, 2, and 3. Right now, MGM is looking bullish but keep in mind that this is a high beta (high risk) stock as things can change very quickly in a matter of days. This is a stock that has to be monitored carefully.

LONG MGM

MGM - Possibly jumping above $13.00 in the upcoming weeks?

MGM - BUY

MGM gave us a BUY SIGNAL when broke its down trend on Friday March 5th by moving above $11.15 and its 50 day MA. The upper Bollinger Band has since started trending higher. MGM has now been trading up in a narrow channel for the past 2-3 weeks. However, MGM's Stochastic is in overbought territory at 90.47. This could indicate that we may soon have a little pullback, but if this happens it shouldn't go back lower than its 50 day MA. Obviously if it were to break back down the 50 day MA this would trigger a SELL SIGNAL. Right now MGM looks bullish as it broke its major down trend which had been intact for the past 2-3 months. MGM could move higher in the upcoming days but the real challenge will be going through the very strong resistance levels of around $12.75-$13.00. MGM hasn't managed to move back above $13.00 in the past 3-4 occasions since it fell below it in November 2008. The day MGM manages to move sharply above $13.00 is when we will have a STRONG BUY SIGNAL.


By looking at the weekly chart we can see that MGM has been trading in a major sideways trend since May of 2009. However, what is the most interesting it that this sideways trend has been narrowing more and more, and MGM now looks to have formed a ascending triangle pattern which started in March 2009. I believe that we are now getting closer and closer to a break, most likely above $13.00 which would confirm this ascending triangle pattern. According to investopedia.com: "An ascending triangle is generally considered to be a continuation pattern, meaning that it is usually found amid a period of consolidation within an uptrend. Once the breakout occurs, buyers will aggressively send the price of the asset higher, usually on high volume. The most common price target is generally set to be equal to the entry price plus the vertical height of the triangle." With that in mind, to calculate the price target in the event of a breakout, we can see that MGM started this pattern around the $4.00 price level and therefore this would give us a price target of around $22.00 ($13.00-$4.00= +$9.00; $13.00+$9.00= $22.00). The $22.00 level coincides with the closest and most significant resistance level after $13.00. MGM's weekly stochastic has also given us a BUY SIGNAL. Overall MGM looks bullish and appears like it could break $13.00 in the upcoming weeks. Based on the daily chart we could see a little pullback this week, but as long as MGM stays above its daily 50 day MA this would give the chance for MGM to eventually move back above $13.00. Obviously, some patterns fail and if MGM were to break below this up trending support line and move below $10.00, this could trigger a sell off which could send MGM much lower. However, until that happens MGM's chart will remain bullish. The current pattern looks very promising, and historically ascending triangles more often break up than down. For traders looking to get into MGM based on the ascending triangle pattern alone, it is usually preferable to wait and see for a break up above $13.00 before getting in, as there is obviously always a risk of seeing this pattern fail.


LONG MGM

FL - Trades above its Weekly 200 day MA for the First Time in Over 2 Years

FL - BUY SIGNAL

After trading sideways between $9.00 and $12.00 for roughly a year, FL has started to make a strong move up about 3 weeks ago when it broke through its key resistance of around $12.00. FL has also been experiencing relatively higher than average volume which is required for this trend up to continue. Despite having a BUY SIGNAL since 3 weeks ago, I decided to take a long position with FL on Friday after getting a BUY SIGNAL from the daily Stochastic which also shows that FL has relatively still some space to move before pulling back. The daily stochastic currently stands around 70 which is still below the overbought territory of 80 and up. The 20 day MA which is depicted by the dashed line of the Bollinger Band is currently FL's strongest support level. FL has managed to stay above its 20 day MA ever since it broke through it 3 weeks agos. Another bullsh sign for FL, is the fact that it managed to close at the highs of the day.


When we look at the weekly chart we can see that FL has broken up above its 200 day MA for the first time since July 2007 when it broke below it. This is very significant as FL has been trending down for the past 2-3 years, and only now are we starting to see the trend shift. The challenge however is to see whether or not FL can maintain its position above its weekly 200 day MA by the end of next week. Another challenge is the fact that the weekly Stochastic is in very overbought territory at 96. However, this doesn't necessarily mean FL will be moving back down very soon, as I have seen stocks continue moving higher while the Stochastic stayed and continued to trend around the overbought level. Keep in mind that stocks that usually trend in the overbought level (e.g. between 60 and 100) is a sign of strenght and usually means the stock is trending up. This has not been the case for FL as it been trending between oversold and overbought territory for the past 2-3 years. Another positive sign for FL is the fact that the upper Bollinger Band has started to trend up, while the lower Band should soon follow if the trend up continues. Finally, I believe that if FL can manage to either stay above its weekly 200 day MA or move even higher by the end of next week, FL would have strong potential to go as high as around $17.00 where its next significant resistance level stands. Aside from this $17.00 level there is very little reistance in FL's way to prevent it from reaching it, and the daily Stochastic's low level leads me to believe that it could reach this price soon. A break above $17.00 could eventually send FL towards $20.00. However, I would first expect a pullback around $17.00 followed perhaps by a sideways trend before it can reach the $20.00 level. FL had first given us a BUY SIGNAL 3 weeks ago after breaking above the $12.00 resistance level, and on Friday we were given a 2nd BUY SIGNAL by the daily Stochastic as well as by seeing FL break through its weekly 200 day MA.


LONG FL

F - Dark Cloud

F - SELL SIGNAL


Although F has been in a major up trend since early November, F has given us a minor SELL SIGNAL today with a dark cloud pattern. The current major up trend is still intact and will remain so as long as stays above its 50 day MA, however the dark cloud pattern does lead me to believe that F will shortly start pulling back as low as around $11.75, $11.45 and $11.15. Basically, what I'm saying is that I believe that there will be an opportunity to get in lower around these levels, once F bounces back up one of them, of course. The stochastic has also given us a SELL SIGNAL today, which strengthens the possibility of seeing a pullback. F is now a WAIT for a BUY SIGNAL. If you are long F, you may consider exiting your position now to perhaps get back in at a cheaper price if you wish to do so. I believe that there is a good chance F will break just below $12.00 tomorrow or Thursday. If F manages to close above today's high of $12.68 tomorrow, the dark cloud pattern will be considered to have failed.

HAS - Flag Pattern Confirmed?

HAS - BUY SIGNAL

As indicated last week, HAS was in a potential flag pattern which started breaking upwards today, and thus gave us a BUY SIGNAL. If HAS manages to maintain these gains above $36 and continue higher tomorrow, the flag pattern will be confirmed. If the pattern is confirmed, we could expect a price target as high as $40.00 before seeing the next pullback. The wide and upward trending bollinger bands does indicate that HAS has indeed space to move higher. HAS strongest resistance levels, currently stand at $38.00 and $40.00.


LONG HAS