Wynn Resorts Stock Is a Prime Target for Bears Now

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WYNN stock - Wynn Resorts Stock Is a Prime Target for Bears Now

Source: Aurlmas via Flickr (Modified)

Casino stocks are on the ropes. Industry heavyweights from Wynn Resorts (NASDAQ:WYNN) to Las Vegas Sands (NYSE:LVS) peaked in early summer and have yet to find a bottom. With bearish forces mounting, both WYNN stock and LVS are worth considering for short trades. Today we’ll focus on the former since it has an attractive looking retracement setup.

The downtrend in WYNN stock has been defined by three plunges. All three drove the stock to create lower lows and were littered with distribution days. These high volume down days signal domination by sellers. We did see two high volume up days in early July when buyers tried to right the ship, but ever since then, buying aggression has been absent.

The trend turnabout has been validated by the moving averages. The 20-day and 50-day are now both descending. Even the 200-day is now flirting with a rollover.

WYNN stock chart
Source: OpitionsAnalytix

On the momentum front, the RSI indicator broke the 50 level during the June swoon and it has remained below it ever since. The two-week rally that ushered Wynn Resorts stock to its current perch has done little to change that.

Throw it all together, and WYNN’s stock looks ripe for another price drop. You can use a break below Friday’s low ($146.01) as a potential trigger for bear trades. Old support at $138 is the first target. As with any price pattern, it’s important to know when the market has invalidated the setup. I would consider a break above the 50-day moving average (at $156) as the tell this go around.

WYNN, Lose or Draw

Here’s a leveraged play that could double your money if WYNN falls back below $140 in the next 45 days. Buy the Oct $150 put and sell the Oct $140 put for a net debit of $4.10. The risk in this bear put is limited to the initial cost and will be lost if the puts sit out-of-the-money at expiration. The max gain is $4.90 and requires that stock in WYNN moves below $140 to be captured.

As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want more education on how to trade? Check out his trading blog, Tales of a Technician.

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Article printed from InvestorPlace Media, https://investorplace.com/2018/09/wynn-resorts-stock-is-a-prime-target-for-bears-now/.

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