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Tickers in this Article: WYNN, LVS, MGM, MTN
The casino stocks have been consolidating for several months now, following a strong summer rally. The group as a whole bottomed out in March 2009 along with the general markets after a ferocious decline that saw many stocks losing over 95% of their value from their bull market highs. Many of the stocks are in a pivotal area after a long resting period, and could be close to emerging into a new trend.

Wynn Resorts (Nasdaq:WYNN) for instance, has been trading in a fairly wide range from the mid $40s into the low $70s. While this is a wide range, this is simply a consolidation for the volatile stock. Late in December, WYNN set a higher low and avoided making the full round trip to the bottom of the range. This is a clue that investors are becoming more bullish on WYNN and stepping up to pay higher prices. WYNN is close to the top of the prior range and could break out if the markets continue higher. The recent low near $58 is an important level to watch on the downside. (For more, see The Anatomy Of Trading Breakouts.)

Source: StockCharts.com

Las Vegas Sands Corp. (NYSE:LVS) is another casino stock that set a higher low in December. LVS also rallied enough to clear a descending trendline that was touching the past few rally attempts. LVS is still below its September highs, but is starting to look more bullish. The high $18s is a possible resistance level, and would be the level to watch for an upside breakout that could challenge the September high. On the downside, there are a few support levels to watch on a pullback. The descending trendline coupled with a rising 50-day moving average may be a logical spot for buyers to step in. (For related reading, check out A Prelude to Sinful Investing.)

Source: StockCharts.com

The chart for MGM Mirage (NYSE:MGM) looks very similar to LVS at this point. MGM has also been consolidating for the past few months and just cleared a descending trendline that was framing the upper range of the base. One difference is the higher low was only marginally higher than the low set in November. MGM is a little extended at this point, but the higher volume on the recent move is bullish and could be providing a clue as to the ultimate outcome of this pattern. Much like LVS, the trendline break and rising 50-day moving average is a logical place to look for support on a pullback.

Source: StockCharts.com

One casino stock that is looking relatively weak is Vail Resorts Inc. (NYSE:MTN). While MTN is technically also in a consolidation, there are a few bearish signs here that must be watched. Typically, stocks will move with their peers, which could prevent a breakdown in MTN if the others in the group rally. However, if weakness sets in for the casinos, then MTN could lead the way lower. MTN set a lower low in January, rather than following the others as they set higher lows. It also broke under the 50-day moving average, which had been acting as support on recent pullbacks. The $35 level is one area to watch for a downside breakout, but the $38 area is another area to watch which could signal a more bullish change in character for MTN. Trading back above $38 would put MTN back over its 50-day moving average and perhaps catch some bears off guard.

Source: StockCharts.com

Bottom Line
Much of what happens to the casino stocks will be dependent on the general markets, but many of these stocks are close to the tops of long and healthy consolidations. If the markets continue to rally as they have for the past several months, then these stocks could outperform as they begin to emerge from their bases. If the markets weaken and enter a correction, then many of these stocks will likely return to the lower ranges of their bases. With clear levels to watch, these stocks are worth following for possible trading opportunities.

At the time of writing Joey Fundora did not own shares in any of the companies mentioned in this article.

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