Does MGM's earnings preview that was just released change your price targets? Sell vs. Buy?
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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%.
hi yoel,
ReplyDeleteI have 3 exiting stock, and I do not know what I have to do... sell or wait
1. MGM and MPEL with gain of 8 and 14%
2. AUY with loss of 2%
3. LCC with loss of 3%
Pls advice.
Thanks
rgds
L
ps: I am regular reader on this blog, it is one of my favourits. I advertise your blog among my colleagues everytime giving some new fan to the blog. Unfortunatelly, nowadays, you do not write and give an advice too much .... why? pls do write
thx
MGM - I think it would be safer to sell MGM and take the gain as it is more likely to move a little lower in the next couple of days and you would risk losing the entire 8% gain. I believe MGM should continue a little lower in the next couple of days towards $13.50 or its 20 day MA. Keep in mind that if you were to decide to get back in MGM after it finishes pulling back, that you would very likely be getting back in over your current entry price. I think MGM has now strong support at $13.00. However, if MGM were to trade already around $13.00-$13.50, I think it would be better to just hold on. If MGM closes below $13.00 or its 20 day MA in the next couple of days we would have a STRONG SELL SIGNAL, and I would sell whether I have a gain or a loss. I think at this price level and with the gain you currently have, making a decision on MGM is a tough call.
ReplyDeleteMPEL - Once you have a gain of over 10%, I think it would be best to apply my trading strategy which with a gain of 14% would have you set a trailing stop order of -5%. If you don't have access to trailing stop order, place stop loss orders and adjust them manually as your gains increase. I think you should visit my January post (Y-Swing 4.5 Trading Strategy) where you can find a table under the header of "Locking in Gains with Virtual Trailing Stop Orders" which should be very helpful. Basically it will tell you what order you should place under all scenarios whether you have gains or losses. The moment you start getting in gains over 10%, the focus should be less on technicals but more on how to protect your gains but also by giving yourself enough room to make more in terms of setting stop loss orders.
AUY , LCC - Although both of these stocks could move a little lower, I think that you should set a -8% stop loss or trailing stop loss order. You should never take a loss of more than -8% on any stock. If your -8% stop loss were to get triggered with both stock it should coincide with SELL SIGNALS from the charts. If AUY continues lower, I don't think it will move lower than $9.65. LCC despite getting a SELL SIGNAL from the stochastic is looking more promising with strong support at $7.15 (50 day MA) and around $7.00.
I strongly suggest you read my Y-Swing 4.5 trading strategy or at least the table I referred to and I believe that if you can become disciplined and follow that table it will help your performance a lot as it did for me. One important thing to learn is the fact that you will have to accept to take on losses when you trade and should always cut them to -8%. Most successful traders have more losing trades than winning trades, but the winners are much bigger gains than the losses.
I do realize that I haven't been writing too much on my blog lately, as I have been a little busy. But feel free to request any detailed analysis of any stock, anytime. If I do find the time, I will try to write a detailed analysis with charts of a couple of your stocks tomorrow.
many thanks
ReplyDeleteall of your advices have benn so useful
rgrds
L