The stock of luxury casino operator Wynn Resorts Ltd. (NASDAQ: WYNN) has seen some volatile swings over the past two months. After staging an impressive rally into mid July the stock ran out of steam in a big way as it traded lower with the rest of the market. Looking beyond the financials of the company, it would of course make sense to see slowing demand in the gambling arena if the economy were to slip into a second recession. However, that is neither the point of this article nor necessarily my view.
What we are looking at here are the technicals. On the weekly chart looking back three years, note that last week’s selloff has brought the stock right to its multi-year up-trend (blue line), where it proceeded to bounce from.
On the daily chart looking back to April note that Wynn Resorts Ltd. (NASDAQ: WYNN) last week not only bounced off the longer term up-trend discussed above, but also the 200 day simple moving average. After bouncing the stock then found resistance at its 50 day simple moving average (yellow line) earlier this week. Historically Wynn Resorts Ltd. (NASDAQ: WYNN) has respected the 50 day simple moving average, which is to say it has consistently acted as some sort or resistance or support.
The close up view of Wynn Resorts Ltd. (NASDAQ: WYNN) uncovers two doji candles on August 16 and 17, followed by yesterday’s gap down and nasty red bar. That sort of action speaks for further weakness ahead. Short positions can be initiated at current levels with stops near $149 and profit targets as low as $110.