Macau casino stocks have acted well in recent weeks, catching strong buying waves in sympathy with Chinese big tech and growth plays that have broken out to 2017 and all-time highs. The upticks could signal better times for the Special Administrative Region, which has suffered through player losses in recent years, triggered by a variety of draconian government-dictated cash controls.

Two devastating storms pummeled the region in August, cutting into revenues, but major operations have held up surprisingly well. In turn, this has encouraged early September buying interest that has lifted top-tier players to 52-week and multi-year highs. Third quarter results are likely to take a hit that is not reflected in current pricing, but market players may forgive and forget because the region reported 12 straight months of growth prior to the deluge. (See also: How Macau Became a Mecca for High Rolling Gamblers.)

Wynn Resorts, Limited (WYNN) stock broke out above six-year resistance in the $160s in 2013 and rallied to an all-time high at $249.31. It turned lower in 2014 and failed the breakout, entering a steep downtrend that continued into the October 2015 low at $50.96. A January 2016 test at that level found willing buyers, completing a double bottom reversal and multi-step uptrend that has now reached within 25 points of new resistance.

A Fibonacci grid stretched across the long decline highlights key conflict zones, with the uptick now approaching the 50% retracement level near $150. The .618 retracement at $173 looks like a more formidable barrier, aligning within a few points of the 2014 failed breakout. Conversely, that lofty level offers plenty of upside from current action near $145, with a pullback into the unfilled Sept. 1 gap between $139 and $141.50 offering a low-risk buying opportunity. (For more, see: Wynn Stock Breaks Out, Looks to Retest Highs.)

Las Vegas Sands Corp. (LVS) barely survived the 2008 economic collapse, with high debt levels bringing the company close to bankruptcy. The stock bottomed out at $1.38 in March 2009 and surged higher, but it is still trading well below the October 2007 all-time high of $148.76. The recovery wave peaked in the mid-$80s in 2014, giving way to a decline that tested the 2012 low at $34.72 in January 2016.

The subsequent advance reached the 50% sell-off retracement in the low-$60s in December 2016, giving way to a broad consolidation that has drawn the outline of a cup and handle pattern. The stock rallied off a trading floor at $59 about two weeks ago and will complete that bullish pattern with a rally up to $66.22. A breakout will then target the .786 retracement level in the mid-$70s, where the current advance may come to an end. (See also: Las Vegas Sands Hikes CEO's Annual Salary 400%.)

Melco Resorts & Entertainment Limited (MLCO) shares broke out above the 2007 high at $22.23 in 2013 and rallied to an all-time high at $45.70 in 2014. The stock then rolled into a decline that continued into the second half of 2016, dumping the stock to a four-year low at $11.90. The subsequent recovery wave for Melco has so far failed to match those of its rivals, stalling below the .382 retracement level in June 2017.

A decline into August found support at the 200-day exponential moving average (EMA), generating a bounce that is now approaching range resistance in the mid-$20s. Accumulation has taken a hit in recent months, lowering the odds that the stock will break out immediately and head into another leg in its 14-month recovery effort. More likely, a final reversal will complete a broader consolidation in the fourth quarter, setting the stage for continued upside in 2018. (For more, see: Melco Resorts Misses on Q2 Earnings, Stock Falls.)

The Bottom Line

Macau stocks have attracted steady buying interest, lifting sector leader Wynn Resorts to a two-year high. That stock and Las Vegas Sands look like good bets for higher prices into next year, while rival Melco continues to build lost sponsorship. (For additional reading, check out: Is the Growth Arc Flattening for Macau Casinos?)

<Disclosure: The author held no positions in aforementioned securities at the time of publication. >

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