In his first "Executive Decision" segment of Mad Money Thursday evening, Jim Cramer spoke with Matt Maddox, CEO of Wynn Resorts (WYNN) , the casino operator with properties in Las Vegas, Boston and Macau in China.
Maddox spent most of the interview reassuring investors that China's crackdown on Macau will not derail gambling in the region or put shareholders at risk. He said the proposed changes are not punitive, they're practical. They're designed with the health and stability of Macau in mind.
Maddox said that gambling and tourism is beginning to return to both Las Vegas and Boston. Travel picked up almost instantly once restrictions were lifted between the U.S. and the U.K., he said, and the rest of Europe will do the same as their economies reopen.
When we looked at WYNN on July 14 we warned that "Traders who are long WYNN should think about what their original investment strategy was and what was their price target and risk point. The long-term may be very profitable, but it is the short-run I have a problem with." We also noted that "we can see a potential downside price target in the $83 area" from the Point and Figure chart.
We wrote about WYNN again this Tuesday here.
Let's check out the charts of WYNN again to see if the worst is behind us.
In the daily bar chart of WYNN, below, we can see that the shares have been under selling pressure since March. WYNN has been trading below the declining 50-day moving average line for some time now but now the slope of the 200-day line is also negative.
Trading volume has been heavy on the most recent decline suggesting that we are seeing some "throw in the towel" price action. It is too early, in my opinion, to decide if this plunge will be a durable low let alone a bottom.
The On-Balance-Volume (OBV) line is weak and the Moving Average Convergence Divergence (MACD) oscillator is bearish.
In the weekly Japanese candlestick chart of WYNN, below, we still have Friday's price action to finish up the latest weekly candle. So far this week the candle's real body is white or bullish. Reading the chart from right to left we can see that prices found support around $70 in 2020. This support zone could operate again in the weeks ahead -- WYNN might find buying interest in the $80-$70 area.
Like anything in the markets we don't know that for certain but we can see how this develops.
In this updated daily Point and Figure chart of WYNN, below, we can see a new downside price target in the $51 area. For this price target to be reached we will have to break the support around $70. For this chart to improve we will either need a strong rally OR base building. Stay tuned.
Bottom-line strategy: In full disclosure I am not a fan of casinos and gambling. When I have vacationed in the Caribbean a number of the resorts I have stayed in have had casinos. I have yet to find them more appealing than sand in my toes. Will shares of WYNN bottom and make a sustained rally? I would approach trading in WYNN as a day by day affair for now.