This article originally appeared on RealMoney.com on Sept. 3, 2014 at 10:15 a.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.
Looking to some of the stock's past action, MGM has had a spike low on April 15 at $22.58, and then again on April 28 at $22.52. Both of those lows were inside the stock's "buying zone" of $23.55 to $22.32, based on the rally between $18.40 and $28.75 between Nov. 20 and March 7.
Fast-forward to Tuesday, and we see the stock gapped down to close at $23.83, making for day 1 of our 3-Day Rule. That gives us a chance to see if there is a trade in this name.
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Yesterday's move has generated a long-term oversold condition -- and, given its support level below, I would look to be a buyer. Given that this is a Day 1 move, it would be bullish to buy up to 25% of your intended position in this stock.
If you are looking to be more aggressive -- that is, pick up more MGM -- wait for a close above the $24.27 in the days to come. That's the 0.236 retracement level of the decline from July 29 to Sept. 2, between $27.64 and $23.24.