Updated July 13, 2015 4:51 p.m. ET
Barron’s has been making the case for beaten-down casino stocks in recent months, and now their charts are adding further evidence to support a bullish bet. With many of their share prices not far from 52-week lows, gaming companies are ripe for gains, and technical indicators suggest the turn has begun.
The Market Vectors Gaming exchange-traded fund (ticker:
BJK
BJK 1.149739939775527%
Market Vectors-Gaming ETF
U.S.: NYSE Arca
36.95
0.42
1.149739939775527%
/Date(1436821200134-0500)/
Volume (Delayed 15m)
:
5659
P/E Ratio
N/A
Market Cap
N/A
Dividend Yield
5.098782138024357%
Rev. per Employee
N/A
More quote details and news »
BJK in
Your Value
Your Change
Short position
) is now attempting to reverse a 16-month bear market and has already moved above short-term moving averages (see Chart 1). While this ETF is rather thinly traded – making it a risky investment instrument – it is useful for tracking the performance of the global gaming sector. Half of its component stocks trade in the U.S and China and include giants such as Las Vegas Sands (
LVS
LVS 4.358132749817651%
Las Vegas Sands Corp.
U.S.: NYSE
USD57.23
2.39
4.358132749817651%
/Date(1436821233640-0500)/
Volume (Delayed 15m)
:
10995136
AFTER HOURS
USD57.15
-0.08
-0.1397868250917351%
Volume (Delayed 15m)
:
P/E Ratio
17.884375
Market Cap
43797197612.0966
Dividend Yield
4.543071815481391%
Rev. per Employee
280105
More quote details and news »
LVS in
Your Value
Your Change
Short position
), Wynn Resorts (
WYNN
WYNN 3.8402309913378248%
Wynn Resorts Ltd.
U.S.: Nasdaq
USD107.89
3.99
3.8402309913378248%
/Date(1436821200242-0500)/
Volume (Delayed 15m)
:
3483725
AFTER HOURS
USD108.103
0.213
0.19742330151079804%
Volume (Delayed 15m)
:
P/E Ratio
23.92239467849224
Market Cap
10549694721.2784
Dividend Yield
1.8537399202891833%
Rev. per Employee
298350
More quote details and news »
WYNN in
Your Value
Your Change
Short position
) and MGM Resorts International (
MGM
MGM 3.8567493112947657%
MGM Resorts International
U.S.: NYSE
USD18.85
0.7
3.8567493112947657%
/Date(1436821333972-0500)/
Volume (Delayed 15m)
:
9848957
AFTER HOURS
USD18.89
0.04
0.21220159151193635%
Volume (Delayed 15m)
:
P/E Ratio
N/A
Market Cap
10219211943.4197
Dividend Yield
N/A
Rev. per Employee
157804
More quote details and news »
MGM in
Your Value
Your Change
Short position
).
Most big gaming stocks mirror the pattern of the ETF, with bullish divergences between price action and momentum readings such as relative strength index (RSI). Even as price made lower lows, the indicator started to rise, and it is usually price that turns to follow its indicator. Trading is still well below the 200-day moving average, signifying a lingering downside bias, but the average looks to be a good target for a bounce.
To be sure, not all stocks in the sector fit the pattern. Mid-sized stocks such as Boyd Gaming (
BYD
BYD 2.808988764044944%
Boyd Gaming Corp.
U.S.: NYSE
USD16.47
0.45
2.808988764044944%
/Date(1436821584339-0500)/
Volume (Delayed 15m)
:
917129
AFTER HOURS
USD16.46
-0.01
-0.06071645415907711%
Volume (Delayed 15m)
:
P/E Ratio
N/A
Market Cap
1768063327.49908
Dividend Yield
N/A
Rev. per Employee
139068
More quote details and news »
BYD in
Your Value
Your Change
Short position
) and Penn National Gaming (
PENN
PENN 0.9615384615384616%
Penn National Gaming Inc.
U.S.: Nasdaq
USD18.9
0.18
0.9615384615384616%
/Date(1436821200093-0500)/
Volume (Delayed 15m)
:
644155
AFTER HOURS
USD18.9
%
Volume (Delayed 15m)
:
P/E Ratio
N/A
Market Cap
1494099371.46629
Dividend Yield
N/A
Rev. per Employee
156972
More quote details and news »
PENN in
Your Value
Your Change
Short position
) have been in rising trends since the middle of last year. These stocks are sector leaders and there is no reason to expect them to stop climbing. But now the larger stocks seem poised to support them, a good sign for the entire group.
One of the largest in the group, Wynn Resorts, now sports an encouraging turnaround story in its chart (see Chart 2). Aside from a clear bullish momentum divergence, it is once again trading above its 50-day average and a bullish crossover among its short-term averages seems imminent.
Specifically, the 10-day simple, 20-day exponentially smoothed and 30-day exponentially smoothed averages are about to flip positions, forming a pattern called a bowtie. This pattern was uncovered by trader Dave Landry several years ago as a sign that the short-term trend is changing. While there have been many close calls during Wynn’s decline, the last time there was a real bowtie signal was when the trend changed from up to down back in March 2014.
The Las Vegas Sands averages are a bit tangled, but unlike Wynn this stock just poked its head above its 200-day average (see Chart 3). This also confirmed a breakout through its own March 2014 trendline. Columnist Jack Hough recommended Sands in February, and last month in the mid-year Roundtable T. Rowe Price Chairman Brian Rogers sang the praises of Sands’ rock-solid balance sheet and 4.8% yield.
A less familiar name whose chart looks promising is Hong Kong-based Melco Crown Entertainment (
MPEL
MPEL 4.4825941821649975%
Melco Crown Entertainment Ltd. ADS
U.S.: Nasdaq
USD21.91
0.94
4.4825941821649975%
/Date(1436821200097-0500)/
Volume (Delayed 15m)
:
4420813
AFTER HOURS
USD22.28
0.37
1.6887266088544044%
Volume (Delayed 15m)
:
P/E Ratio
28.528645833333332
Market Cap
11400165291.3837
Dividend Yield
0.6129986307622091%
Rev. per Employee
243208
More quote details and news »
MPEL in
Your Value
Your Change
Short position
), which operates casinos exclusively in the Macau region of China.
Trading on the Nasdaq as American Depositary Shares, Melco shows a fairly clear bullish reversal pattern on candlestick charts complemented by bullish momentum (see Chart 4). Between June 26 and 30, it sold off, jumped down to a small range day of indecision and then jumped back up with a strong gain on heavy volume. In Western bar charts, we might call it an island reversal. In candle-lingo it was called a “morning star” pattern and, as its name implies, it represents the dawn of a new day, or rally, in this case.
After a few days of rest, it jumped up again Monday to confirm the positive change in fortune.
Gaming stocks as a group look much better now than they have in a quite some time. Perhaps the potential end of the slide in the Chinese stock market may have boosted these stocks, which are exposed to the Macau marketplace. But whatever the reasons, the technicals are better and worthy of investor attention.
Getting Technical Mailbag: Send your questions on technical analysis to us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . We’ll cover as many as we can, but please remember that we cannot give investment advice.
Michael Kahn, a longtime columnist for Barrons.com, comments on technical analysis at www.twitter.com/mnkahn. A former Chief Technical Analyst for BridgeNews and former director for the Market Technicians Association, Kahn has written three books about technical analysis.
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