Dow Jones - SELL SIGNAL Fails, The Trend Up Continues

DOW JONES - BUY

After closing higher yesterday and being strongly back up today, we can confirm that the Dow Jones previous SELL SIGNAL has failed. After today's strong move higher, we can now expect the Dow Jones to resume its trend up and continue to hit higher highs. This will remain true until we see the Dow Jones move strongly down below its 20 day MA which it failed to do over the past 2 days.

Dow Jones - The Beginning of Another Correction?

DOW JONES - SELL SIGNAL


Today the Dow Jones had the biggest one day drop since the month of February when the last correction had begun. The Dow Jones gave us multiple SELL SIGNALS today, starting with the Dow Jones breaking below its 20 day MA since mid-February. Both the MACD and the Stochastic also gave us SELL SIGNALS today. The next couple of trading sessions should give us a clear picture of whether or not we are indeed starting a correction or if this is just a false SELL SIGNAL. My personal intuition tells me that this is indeed the beginning of another correction since January. Now if the Dow Jones does continue lower in the upcoming trading sessions and stays below the 20 day MA, the question is how low could it pull back to. By looking at the daily chart we can see around 5 significant support levels that may be tested in the upcoming weeks if the Dow Jones does indeed start a correction. The next significant support levels stand around 10800, 10700 (50 day MA), 10500, 10400, and 10300. I think it is very likely that we will see the Dow Jones pullback at least to its 50 day MA and I wouldn't be surprised to see it break lower as it did in January. If the 50 day MA is broken, I think there is a very strong potential of seeing the Dow Jones pull back as low as 10300. A move below 10300 could send the Dow Jones back towards its 200 day MA around 10100, and a break below this level would be very very bearish, however I think this is very unlikely. With all that being said I think the Dow Jones could have a correction of around -7%. Another important secondary chart which is important to monitor is the Stochastic which as the Dow Jones moved higher we saw the Stochastic trend between approximately 75 and 95 despite giving minor SELL SIGNALS along the way. If the Stochastic does fall sharply lower below 75, I think this will be just another affirmation that we are in a correction. As things stand right now, we are getting SELL SIGNALS and we await to see if we can get a confirmation in the upcoming trading sessions. Right now I strongly advise to not take any long positions as many people may mistakenly see today's big down move as a buying opportunity. This could be true if the Dow Jones bounces back strongly higher from here, however it would be foolish and too risky to take long positions today. If the Dow Jones does continue lower as I expect it to do, you should consider exiting your long positions if you haven't already and move towards taking short positions.

AIG - Trending Up

AIG - HOLD


AIG has been trading in a major up trend above its 20 day MA since the beginning of March and its 50 day MA recently crossed above its 200 day MA which is a bullish sign. However, AIG is one of the most volatile stocks I know of and a pullback towards its 20 day MA (around $38.50) is imminent. Despite still trending in a major up trend, AIG's pullbacks are significant and if it were to begin on Monday could lose about 13% of its vale before bouncing back up. That's why in the case of AIG it's always safer to take a long position near a support level for which it recently bounced back up from. Keep in mind that AIG could continue strongly higher from here, however it's hard to predict when the pullback will start, but you can expect it to be brutal. Given the fact that volume has been trending down during the past trading sessions while the price moved up may be a hint that AIG will be pulling back soon. If you are already long AIG, you want to HOLD on to it as long as it continues moving higher. Based on the current price of $44 that would be immediately followed by a pullback, I would be aiming to get long around $38.50 to $40 depending on whether or not AIG continues higher in the upcoming trading sessions.

MPEL - Jumping back up

MPEL - BUY SIGNAL

After seeing a doji candlestick yesterday which is the first sign of a reversal and a potential bottom, MPEL jumped back up strongly today over its 200 day MA today and thus gave us a BUY SIGNAL. MPEL and now appears to be resuming its major up trend after a pullback during the last couple of trading sessions. MPEL's stochastic is also about to give us a BUY SIGNAL. Looking at the chart and MPEL's trend since the month of March, I think it is very likely of seeing MPEL get near $6.00 before the next pullback. To confirm this BUY SIGNAL we want to see MPEL remain above its 200 day MA tomorrow and preferably hitting a higher high or closing higher.

Dow Jones - Where is it heading next?

Dow Jones - WAIT

After exactly hitting its weekly 200 day MA around 11150, the Dow Jones pulled back sharply. The weekly 200 day MA is a critical resistance level which when it will be broken will trigger a STRONG BUY SIGNAL. Right now it's hard to say if the Dow Jones will bounce back up higher next week or experience perhaps a small correction. When we look at the daily chart, we can see that the Dow Jones' major up trend is still intact above its 20 day MA (middle green dashed lines). The daily 20 day MA currently stands around 10950. The question for next week is whether or not the Dow Jones will manage to hold above this level (20 day MA). A bounce back up the daily 20 day MA will have the Dow Jones resume its major up trend and we could then perhaps see it break above its weekly 200 day MA. However, given the fact that the weekly 200 day MA is such a strong resistance level to break above, I believe that there are good chances of seeing the Dow Jones break its daily 20 day MA next week or the week after, and therefore trigger a STRONG SELL SIGNAL. If this occurs I do believe we should have a small correction towards the following support levels: 10750, 10500, 10300, 10100, 9900-10000. If the Dow Jones falls below its daily 50 day MA (currently around 10600) there will be a potential of seeing the Dow Jones move down towards its daily 200 day MA currently standing around 10000. We should have a better idea where the Dow Jones may be heading next, next week, and because we are at a level of uncertainty I have issued a WAIT signal.

Weekly Chart

Daily Chart

MGM - Quick Update

Does MGM's earnings preview that was just released change your price targets? Sell vs. Buy?

My price target of $18 to $22 does not change as long as the major up trend persists, meaning that MGM remains above its 20 day MA around $13.00. However, based on today's earnings preview and the reaction in the after-hours I sold all my position in MGM in the after-hours around $14.86, as I saw that my -8.00% trailing stop order was about to get triggered. After such a big and quick run by MGM during those past few days, we had to expect a pullback sooner rather than later. One warning that this pullback was coming is the fact that volume has been trending down during the past few trading sessions, and as you know you need to have a continued increase in volume for the price to continue higher. If the price continues higher while volume trends down, it usually is just a matter of time before we see a pullback, as is what it seems to be happening now with MGM. Right now, I expect MGM to pullback as low as around $13.10 towards its 20 day MA. The next support levels are at $14.50, $13.50, and around $13.10. I may decide to get back in MGM if it moves back towards its 20 day MA and bounces back up. If MGM were to fall below the 20 day MA this would trigger a SELL SIGNAL. Even if my target price is at $18 and $22, you cannot assume that once a pullback begins that it will not fall much lower than expected and maybe break the trend. As you know, when a stock trends up it usually does not go straight up and it will have pullbacks here and there but you never know if the trend will be broken on one of those pullbacks and that's why it's always safer to sell, especially if you have decent gains. Basically, what I'm doing is applying my Y-Swing strategy that you can read in one of my January posts. Right now I will not issue any signal, but assuming MGM does close around or below the prices that it traded during the after-hours, we should have a SELL SIGNAL. Keep in mind that if MGM were to pullback in just one day towards its 20 day MA around $13.10, we would have a WAIT signal to see if MGM manages to bounce back up. I personally think MGM will pullback towards $13.10-$13.50 for the next couple of days before bouncing back up. If it does manage to bounce back up, I think it will just be another opportunity to get in again. For my part, by applying my Y-Swing trading strategy I will not tolerate a swing loss of of more than -8.00% and that's why I sold all my position, cashing an average gain of around 25.00%.

MGM - Finally shoots up above $13.00

MGM - STRONG BUY SIGNAL



On March 14th, I indicated that MGM could possibly be jumping above $13.00 in the upcoming weeks and today this prediction has come true. On March 5th, MGM started a major up trend above its 20 day MA. MGM's biggest challenge would be to break above the $12.80 and $13.00 resistance levels that were both broken today and now triggered a STRONG BUY SIGNAL. Just 3 weeks ago I also indicated that there was a weekly ascending triangle pattern which was also confirmed about 2 weeks ago. With a close above $13.00 MGM should manage to easily move up towards its critical resistance level around $14.25, and if this level is broken expect MGM to move towards $18.00 and $22.00. MGM ended the day with a volume of around 38.51M which is 86% higher volume than the 20.70M average. This is very significant and necessary to see MGM continue higher after breaking the $13.00 major resistance level. MGM's new support level is now $13.00 and this should be confirmed in the event of a pullback which would see MGM bounce back up after hitting $13.00 again. MGM's daily Stochastic and MACD both triggered a BUY SIGNAL today. I wouldn't be surprised to see MGM have a little breakout tomorrow and open around $13.50 to $13.80. If that does happen we just have to hope that it can close around the highs of the day or we may get a SELL SIGNAL if we get a shooting star top pattern. If we do see such pattern after MGM trades much higher, we could see pullback back towards $13.00 and if it holds up then it will be very bullish and a re-affirmation that $13.00 is now the new support level.


LONG MGM