Stock Trading Predictions & Technical Analysis: February 2011

Sunday, February 13, 2011

MGM - Will It Pop or Drop After Earnings Report?

MGM - WAIT

MGM will be reporting its earnings report before the bell this upcoming Monday, and the question is: how will the street react? Will MGM pop or drop? If we analyze the charts alone, MGM's trend and chance of popping up tomorrow are relatively good. Despite the recent pullback over the last month, MGM has remained strong above its 50 day MA for the past 5 months. MGM has jumped back above its slowly trending down 20 day MA which is about to coincide with its up trending 50 day MA. Based on the last 5 months, I expect MGM bounce upwards tomorrow after the earnings report as I expect the strength of the 50 day MA to prevail over the 20 day MA. We never know for sure what to expect from earnings report but these reports are critical point in every stock's trend. If MGM strongly beats expectations, we could finally see it trade north of $17.00 which would trigger a STRONG BUY SIGNAL, at which time MGM would coincidentally finally break out of its weekly ascending triangle pattern for which I wrote about on January 9th, for which I set an eventual price target of approximately $31.00. MGM could however also disappoint while having a positive outlook on the future for which we could see modest gains from MGM. If MGM fails to meet expectations, MGM would have the potential to break its 50 day MA and go as low as $13.00 to $12.30.

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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.