Stock Trading Predictions & Technical Analysis: MGM

Tuesday, March 16, 2010

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

No comments:

Post a Comment

DISCLAIMER

The analysis and information given on this site is for information purposes only. Trading in these strategies may result in capital loss. Individuals should do their own independent research or consult an investment advisor before taking investment action. All materials on this site, including the stock picks, are for news and entertainment purposes only and are provided on an "as is" basis and without warranties of any kind, either express or implied.

Under no circumstances will yoel stockpredictions.blogspot.com be liable for any special or consequential damages that result from the use of, or the inability to use, the materials in this site, even if advised of the possibility of such damages including, but not limited to, negligence. In no event shall yoel-stockpredictions.blogspot.com have liability to you for any damages, and losses for accessing this site or using the information provided.Yoel-stockpredictions.blogspot.com does not guarantee that the information contained herein or distributed from this site will be uninterrupted or error-free, that defects will be corrected. Past Results are not necessarily indicative of future performance.

Yoel-stockpredictions.blogspot.com does not trade against you. Some sites are using the size of their visitors to 'move the market' and take advantage personally with their stock picks. This is illegal, and mostly applicable in smaller less liquid securities, which are not covered on this site. It is highly unlikely that the articles in this site about stock picks could ever move the market.

As a visitor to this site, you acknowledge and agree that any reliance on or use by you of any information available on this site shall be entirely at your own risk. In no event shall yoel-stockpredictions.blogspot.com be liable for any direct, indirect, consequential or exemplary damages arising from the use or the performance of this site, even if will yoel-stockpredictions.blogspot.com has advised of the possibility of such damages. Trading may not be suitable for all visitors of this site or the information provided by this service. The visitors assume the entire cost and risk of any trading they choose to undertake.

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.