The major casinos continue to weaken, with LVS MPEL leading to the downside in recent weeks and threatening major topping out patterns on a multi-year basis, perhaps out of concerns in Macau.
The issue then becomes whether the market may be hinting at larger concerns, perhaps at here in the U.S. in Las Vegas with the consumer.
Either way, a good tell will be the action in the likes of MGM WYNN, to see if they, too, break lower.
I remain short Wynn Resorts, inside 12631, seen on the daily chart below continually probing well-defined prior price support.
A basic tenet in technical analysis is that the more support is probed the more likely it is to eventually fail. Here, buyers have yet to stake their claim on this most recent test, despite previously showing up like a blackjack player to double-down on 11.
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You can look to several reasons for the potential weakness in casinos…the primary catalyst right now is the crackdown on illegal funds flowing through Macau casinos. This is why you are seeing such pronounced weakness in names associated with Macau. There are estimates that up to 60% of the money wagered there is connected to the triads or other illegal means. By eliminating that stream, performance will suffer. Also note that there have been hints that they are going to get tougher in Vegas as well, which will also hurt.
Next, you have new competition coming to Vegas, although most isn’t in the immediate future…SLS just opened and is sure to take some of the young money, specifically from the nighlife, which has proven to be very profitable for WYNN (XS, Surrender) and LVS (Lavo, TAO). Resorts Worldwide opening in a few years is going to take a huge chunk of the asian high limit market away from everybody, although I’m not sure anybody is specifically worried about it just yet.
Next, you have some companies building ferris wheels as their saving grace, which is clearly not working. CZR is a short from now until bankruptcy. Any shot higher is a chance to short more.
Excellent points. Thank you for sharing.
Conversely, every time WYNN has hit support it bounced of and ran up. Why not buy here and place stop below today’s low?