Play the Dubai World Overreaction in MGM

11/30/2009 11:02 am EST

Focus: STOCKS

Tim Bourquin

Co-Founder, The Traders Expo and The Futures & Forex Expo

In recent trading, shares of MGM Mirage (MGM) fell 4.09%, or 45 cents, to $10.56 per share after its major real estate partner, Dubai World, asked creditors for a standstill agreement until the default situation is worked out.


Click to Enlarge

My trading sense in situations like these is that there will be a major overreaction to the downside, but that the gap will likely fill and present an opportunity to grab quick profits.

I would look for the stock to bounce off a resistance area of $8.50, where it has made recent lows. However, a move to the upside—one that makes up a good portion of that overreaction—will likely occur at that point.

By Tim Bourquin, Trading Content Director, MoneyShow.com

Related Articles on STOCKS

Keyword Image
11 Reasons to Buy Microsoft
14 hours ago

For our latest recommendation, we revisit one of the world's most prominent technology companies, Mi...

Keyword Image
A Trio of Top-Tier Biotechs
14 hours ago

We hold three biotech stocks in our growth portfolio — Biogen (BIIB), Bioverativ (BIVV), and R...

Keyword Image
Saudis, Oil and ETFs
14 hours ago

Under the guise of clamping down on “widespread corruption,” Prince Mohammed bin Salman ...