We have had some fun with this one before. I do not normally recommend the purchase of a fata morgana  at any price, however, for those that are disciplined this may provide an interesting opportunity. Here is the chart;

For almost a year this one has been going sideways, and as the saying goes, “do not sell a dull market”. Now maybe I am seeing things that are not really there, but it sure could be a very nice triangle which would then imply another, similar , leg up with a target around $22 or so. That this is not entirely a pipe dream I have added the long-term chart, below.

Remember that you are buying real estate, in the middle of the desert, and hoping that the gambling proceeds will pay the rent. Clearly not for everybody so discipline is required. Either use options and/or place a stop-loss at $9.  At roughly $11 right now the risk /reward profile is a pretty attractive one of $11 up against $2 down.

MGM is a very good example of why you should ignore fundamentals most of the time (by the way EW does that , all the time). We looked at the stock on Feb.6, when it was about $5, wondering where it might go and never looked at it again. This is gambling after all. Well from a high of about $103 it hit a low of $1.81 in March (like everything else), clearly a real bear market. In the meantime capacity in Las Vegas is going to increase by 16.000 rooms or about 12% (mostly Citi Centre, a joint venture between MGM and Dubai World – wondering how your petro-dollars are recycled?). The house take is down by 17%, the number of visitors has fallen about 9% and the average room rate fell by 32% The only shining light here is that gambling is not entirely discretionary, for a good number of participants it is an obsession if not an outright addiction and consequently demand is inelastic relative to income. If you have doubts about this go visit Casino Rama and observe for your self the sad circumstances of the clientele. Sodom and Gomorrah certainly come to mind.  Here is the big picture.

This could be a full cycle (5-waves from the lows) so it is conceivable that it would go bankrupt some day (there are 31mln shares sold short) but that is still a little down the road , if it happens. The lesson here is that you should completely ignore all fundamental evidence and almost as a matter of principal , like a Pavlov dog if you wish, always buy a stock below , say $3. Here is the detail.

Not quite as good as C , F , CBS, MAL and no doubt many others but there is strong support for this “hold your nose and buy” approach. It worked for Bre-X , NT, Asea Brown Boveri, Ahold. This is the hope factor at work, just do not stick around too long. GM is a definite maybe, maybe not!

Wave count is not clear, is this going off the board? If nothing else it shows what gambling does for you.