Las Vegas Sands Corp. (LVS), the casino giant, has been among the hardest hit companies during the pandemic. Las Vegas, Nevada, saw the whole city struggle this year as casinos remained closed for an extended period of time.
Even as they were allowed to begin opening up, Las Vegas Sands and other tourist-bound hotels were forced to stay closed due to lack of demand. Consumers simply didn't want to travel. But now we are getting to what feels like an end of the pandemic as most states get back to being fully opened.
That makes Las Vegas Sands an interesting stock to look to purchase shares after the dip. The stock is still nearly 40% below its highs back in January. And a unique look at its price chart gives us even more confidence to buy the dip in Las Vegas Sands stock today.
I'm using the relative rotation graph concept to guide me on picking up stocks after a dip. It combines the relative strength of the stock to the S&P 500 with momentum to create a truly interesting chart that's called the relative rotation graph.
The key thing to watch in this chart is the relationship the relative strength and momentum creates. It ends up showing a clockwise rotation in stocks from leading the overall market (top right) to weakening (bottom right), lagging (bottom left, where Las Vegas Sands currently is), and improving (top left) before leading again. This is a rotation that almost all stocks go through on a consistent basis.
However, not too many people are familiar with the relative rotation graph, so in the chart below, I included all the same information in something we are used to seeing – a price chart. I have shaded the candlesticks by the color quadrant in the relative rotation graph, and I added the relative rotation graph lines below so you can see how the ratio line (solid red line) compares to the momentum (dotted blue line).
Las Vegas Sands has two things going for it in this chart. One, it is underperforming the overall stock market by a significant margin. In previous situations, like late March, when it fell behind this much, it marked the bottom for the stock. Now that shares have been choppy for a few months, this setup is suggesting another rally in the stock.
The second part is that Las Vegas Sands' share price is currently shaded red, telling us that it is in the lagging quadrant of the relative rotation graph. We are looking for the stock to complete the rotation and head into the improving quadrant, which will be blue, and eventually lead the market higher. This makes right now the perfect time to buy Las Vegas Sands on the dip looking for a quick rebound.
The Bottom Line
Las Vegas Sands is a stock that has been beaten up this year. According to the relative rotation graph, now is the perfect time to jump in and pick up the stock right before it is expected to head higher.