Wynn Resorts Ltd. (WYNN) reported mixed fourth-quarter results, with earnings missing consensus numbers, revenues beating and an upbeat view on prospects from Macau. Let's check out the charts and indicators for the casino company.
In the daily bar chart of WYNN, below, I can see how the shares have doubled in a little over three months. Wow. Prices are clearly above the rising 50-day moving average line and above the rising 200-day line.
Trading volume was heavy in September and October but has been disappointing for much of the past three months. The On-Balance-Volume (OBV) line has risen the past three months and tells us that buyers of WYNN have been more aggressive than sellers. Thursday's upside price gap could turn out to be an exhaustion gap if the gap is quickly filled.
The 12-day price momentum study shows a lower high from November to January for a bearish divergence. Bearish divergences can at times foreshadow downside reactions.
In the weekly Japanese candlestick chart of WYNN, below, I see a mixed picture. The shares have climbed from a June low and have retraced a little more than half of the previous decline. WYNN trades above the rising 40-week moving average line now.
Trading volume has declined during the markup phase and that is not a positive development. The weekly OBV line does show a rise but not a robust rise.
The 12-week price momentum study shows slowing momentum the past four weeks.
In this daily Point and Figure chart of WYNN, below, I can see a price target in the $141 area.
In this weekly Point and Figure chart of WYNN, below, I can see a price target of $131, lower than the daily price target.
Bottom-line strategy: There are three kinds of gaps -- a breakaway gap. a runaway or measuring gap, and an exhaustion gap. WYNN has doubled in price the past three months and Thursday the stock gapped to the upside.
Could this become an exhaustion gap where potential buyers and bears throw in the towel and go long WYNN? Bet carefully and if Thursday's gap is quickly filled it will signal a downside reversal.
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