Tickers in this Article: WYNN, LVS, MGM, MCRI
The casino stocks have been under pressure lately, leaving them unable to recover from a recent gap down in the markets. On June 29, the general markets gapped lower in what ultimately was the beginning of a three-day plunge that took the S&P 500 to new lows for the year. While the market indexes were able to recover and fill these gaps, the casino stocks are showing relative weakness with an inability to get back above these levels.

Wynn Resorts (Nasdaq:WYNN) held up well after the June 29 gap lower, as it held important support just under $75. It bounced from these levels along with the markets but struggled the minute it ran into the price void from the gap. This is a not-so-subtle clue that sellers were waiting to get out near this area. WYNN also fell below its 20- and 50-day moving averages on the reversal. It looks like WYNN is headed for another retest of the $75 level and should be watched to see if it can hold this area once again.

Source: StockCharts.com


Las Vegas Sands (NYSE:LVS) is another casino stock that failed to climb back above the gap left behind on June 29. LVS actually held up even better than WYNN after that gap lower as it refused to retest the lows it set in May. It ended up forming a higher low, but the bounce attempt after forming the low has left much to be desired. The recent low near $21 is the area traders should watch, as a drop below this level will almost surely mean a retest of prior support near $19.

Source: StockCharts.com


MGM Resorts International (NYSE:MGM) has been weaker than both WYNN and LVS as it was already setting lower highs and lower lows even before the June 29 gap. In fact, that gap down took MGM down through a base it had been attempting to build and could act as significant resistance moving forward. Another clue that the path of least resistance is down for MGM is the alignment of its major moving averages. As you can see, the 20-, 50-, and 200-day moving averages are all pointing lower. This is a clear sign that the current trend is lower.

Source: StockCharts.com


While Monarch Casino & Resort (Nasdaq:MCRI) has also been showing weakness, it may be pulling into a strong support level. MCRI has been trading lower as it follows a channel, but also fell below an important support level near $10.50. The next level to watch is near $9.50, and then the 200-day moving average near $9.

Source: StockCharts.com


Bottom Line
One of the primary blames for the recent downturn in the markets is the generally accepted idea that the economy is not recovering as well as expected. What industry would suffer more than one predicated on consumers with spare cash to throw away? If the markets continue to head lower, it will be difficult to imagine a scenario where the casinos could avoid following suit. The majority of these stocks are already under their 50-day moving averages and are honing in on their 200-day moving averages. It may take some time for these stocks to stabilize, and there is a remote possibility that if the markets can somehow find a way to bottom soon, some of these casino stocks may land near good support levels. While this will probably make them attractive targets for longer term investors, shorter term traders will likely find the going difficult until these stocks can clear the gap voids highlighted above. (For more, see Going All In: Comparing Investing To Gambling)

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

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