Wynn Resorts, Limited (WYNN) shares rose about 3% on Wednesday after options traders placed bullish bets. Around 20,000 call options changed hands with a put/call ratio of 0.37, suggesting bullish sentiment ahead of Wynn’s Oct. 25 earnings date. Activity in the options market tends to influence equity prices since options are an indicator of future expectations.
Casino stocks experienced a weak month in September, but Macau’s fourth quarter could provide a boost. Gaming revenue in the region increased 2.8% in September to 21.9 billion patacas ($2.71 million), which fell short of analysts’ 6% estimate. The good news is that fourth quarter gaming revenue is expected to improve by 11%, with 15% full-year growth. (See also: Wynn Resorts: The Gaming Stock for the Chinese Market.)
From a technical standpoint, the stock has been in a sharp downtrend since May but could be bottoming out. The relative strength index (RSI) is near oversold levels with a reading of 36.35, while the moving average convergence divergence (MACD) has been trending sideways. These indicators suggest that the stock could be making a bottom over the near term.
Traders should watch for some consolidation above S1 support at $119.86 before a potential move toward the upper end of the price channel near the pivot point at $133.98. If the stock breaks out from these levels, traders could see a move to R1 resistance and the 50-day moving average at $142.62. If the stock breaks down, it could hit S2 support at $112.65. (For more, see: 3 Casino Stocks Ready for Big Rebounds.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.
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