Stock Trading Predictions & Technical Analysis: MGM

Monday, March 22, 2010

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

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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.