Wynn Resorts, Limited WYNN traded higher by more than 7 percent Monday after March gaming revenue in Macau was better than feared. Technical traders will be watching Monday’s close closely to see if Wynn can break above a key technical resistance level for the first time since June of 2018.
Potential Breakout
Gross gaming revenue was down 0.4 percent in the month of March, but it was on the high end of analysts estimated range of -6 percent to +1 percent. Wynn and other casino stocks experienced a relief rally Monday on signs that revenue is relatively stable in Macau despite the ongoing U.S. trade war with China.
Wynn’s big rally pushed the stock as high as $127.79 in early Monday trading. Wynn shares broke above the stock’s 50-day simple moving average of $121.71 and penetrated the 200-day SMA at $126.67 for the first time in more than nine months.
The stock produced a bearish double top at $198 in January and May of 2018. Concerns over the trade war and a slowing Chinese economy began to weigh on the stock in the second half of the year. Wynn shares broke below its 200-day SMA at around $165 in late June and has stayed below it since. In February, a test of the 200-day SMA failed when the rally stalled at a peak price of $133.73.
Key Levels
Monday’s rally is good news for Wynn bulls, but a close above the 200-day SMA at $126.67 would be even more bullish from a technical perspective. The double top at $198 in early 2018 was followed by a bullish double bottom at around $90 in October and December. With the stock somewhat in limbo, the next couple of weeks could determine the prevailing trend for the stock in the second quarter.
Beyond $126.67, the next key resistance level is February’s high of $133.73. A close above that level would put Wynn shares at new six-month highs and potentially pave the way for a long march back toward $198.
If the 200-day SMA test fails once again, traders should look for a test of the March lows around $115 in the near-term and potentially eventually another trip down to longer-term support at $90.
Fundamental Catalysts
Of course, while it’s always good to keep an eye on the technical picture, there is also major fundamental news that could override Wynn’s technical trends at any point.
Traders should keep an eye out for Wynn earnings expected out on or around April 23. April Macau revenue numbers will be reported on May 1, and any headlines related to a potential U.S. trade deal with China could also be a major near-term fundamental catalyst for the stock.
At time of publication, the stock was trading higher by 7.5 percent at $128.30 per share.
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