Loss Vegas: Short MGM

The Market Week Ahead

The big important data reports this week are:

Tuesday: New Zealand 2nd Quarter Gross Domestic Product.

Wednesday: French August Consumer Spending, and the week's biggest, the US Fed Open Market Committee Interest Rate Decision.

Thursday: Australia Financial Stability Review.

The US Dollar is at yearly lows currently. If the Dollar starts rising with or without a US Interest rate increase, stocks should start falling. Consensus is that the Fed will keep the rate at 0.25%. Unemployment is still climbing so the Fed might keep printing money-feeding stimulus to the economy, giving support for a lower dollar and higher stock prices. But then again, the dollar could find a bottom and start rising again. Watch out for that.

My Stock Pick This Week

Even with a flat interest rate decision on Thursday, the dollar could easily rise with its price at yearly lows currently. Thus, stocks would be ripe for a fall. My stock pick this week is a short-sell on a big company that is based in a city with the highest real estate foreclosure rate in the nation, Las Vegas. 1 in 62 households in Loss Vegas are foreclosed. The stakes are piling up for the gambling stocks. With the sector up more than threefold since March, it trades at 20.5 times expected earnings over the next year, compared with 17.4 times for the overall market. Vegas continues to suffer from fewer visitors and an overbuilt real estate industry. This company just said that it might report a third-quarter non-cash impairment charge related to its City Center complex's for-sale residences. Ah, there’s that real estate problem again.

Sell Short MGM Mirage – Ticker MGM

Sell Entry: 15.83 to 12.97

Stop-Loss: 16 or Higher

Take Profit Areas: 11.88, 9.32, 7.48, 5.84, 4.71

MGM Mirage Company Profile

MGM Mirage, through its subsidiaries, owns and operates casino resorts in the United States. The company’s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2008, the company’s properties consisted of 17 wholly-owned casino resorts and 50% investments in 4 other casino resorts. MGM MIRAGE also operates luxury hotels in the Middle East and Asia. It has a strategic alliance with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort under the MGM Grand brand name in Ledyard, Connecticut. The company, formerly known as MGM Grand, Inc., was founded in 1986 and is based in Las Vegas, Nevada. MGM MIRAGE is a subsidiary of Tracinda Corporation.

Click here to review and trial the Trading Software we used in determining our short position on MGM.

Click the MGM Mirage Stock Chart for a larger view.

Disclosure: Selling short based on trade plan above.

Comments

[skwestorange:]

Not sure why this author thinks it is a good short now. At its current price of 13 and change, the stock is about 60%+ from its 52 week high and more than 80% down from its recent all time high. The economy world over seems to be stabilizing and so is the real estate situation in Vegas. Further, the Dubai world investment in the City center project should help strengthen the Company's finances. Objective data to support the short recommendation would be of help.

Sep 22 02:02 PM

[beandog:]

Short more. MGM going to 25.
beanieville.blogspot.c...

Sep 22 08:25 PM

[SlingWing9:]

I'm in agreement with the other posters. The author is using fundamental analysis in a consumer sentiment led rally. Last I heard, retail investors are sitting on 3.1T in money markets and bonds, eager to put it into stocks and afraid to miss the rally. Any stock that won't go up in this market must be a friggin brain dead company. You might get away with shorting the dollar though.

Sep 22 10:00 PM