Macau longs are running out of time: tick tick tick. The incipient stock movement, while technically driven this month, isn’t likely to last.
Short-term trade opportunities were touted in January, and BJK EFT, the Macau proxy, is up 6% at $37. Analysts expect upwards of $38 and even $40 depending on late April earnings reports. The stock is now hovering at $38.83 – close enough for now.
Who has a crystal ball?
But no one has a crystal ball. We will have to wait several months and through the summer. Meanwhile, let’s watch Wynn’s 50 and 200 day moving averages and see the effects of a Crown acquisition. A bullish signal means good news for short-term technical traders.
A breakout will rake in the money and suck in even more traders. But the RSI (relative strength index) could jump from weak to oversold. Quick profits come at a risk. Buy puts and look for success.
Times have changed already since January when sentiments were bearish. (Sanford C. Bernstein was forecasting a dip of 8-12% in gross gaming revenue)The bad numbers are yet to appear. Luckily, the drop was only 5%.
The bulls outnumber the bears right now as the U.S. trade war with China is improving. Nonetheless, the economies of these countries are in trouble. A deal could change everything for the global economy, but it is not in place to date.
Where are we headed
We hope where it is all going is better than the prognosis. U.S. banking system monetary growth is an indicator. It should peak about now at mid-month. A drop may follow. Investors aren’t tuned into this figure so other major events will set the tone for trading.
Of more import perhaps is the S&P 500, the barometer of the market. It hasn’t been moving much over the last 15 months. Are we in a bubble awaiting new highs? 2019 looks like 2015 during which time this index was stagnant. When it broke, Wynn saw a 50% decline in shares to a low of $47 by September.
Those with Macau positions in weeks ahead should be unwound. Again, when Wynn breaks out, buy puts with a strike price of $120 expiring in September and January. This bearish trend will hinder gains short-term so protecting yourself is in order.
We might be surprised, however, by a Wynn rally.