Poor February Action for Casino Stocks (Nasdaq:Wynn), (NYSE:LVS), (NYSE:MGM)

By Nicholas Santiago on March 2nd, 2010 3:34pm Eastern Time

The SPDR Trust (NYSE:SPY) found a short term low on February 5th, after a sharp January decline. Since the early February low many stocks have bounced sharply higher. Technology, energy, retail, and financial sectors have all rebounded after the January sell off. However, the casino stocks are still near the low end of the daily chart range and this is signaling weak relative strength.

The three main casino stocks that are market leaders are Las Vegas Sands Corp (NYSE:LVS), Wynn Resorts Ltd (Nasdaq:WYNN), and MGM Mirage Inc (NYSE:MGM). Generally, these stocks will trade in the same direction with each other. Therefore, when one is trading higher or lower the other two stocks usually trade the same way. These stocks are also somewhat of a barometer of the global economy.

Wynn Resorts Ltd (Nasdaq:WYNN) has traded better than Las Vegas Sands Corp (NYSE:LVS) and MGM Mirage Inc (NYSE:MGM). Wynn Resorts stock is trading about 10 points off it's January 2010 high. Should this stock make a lower high on the daily chart this could be a bearish sign for the month March.

Las Vegas Sands Corp (NYSE:LVS) is also trading below it January high. This stock made another lower high on February 17th and could be forming another lower high on the daily chart. If this pattern is formed it would increase the odds of this stock declining soon.

MGM Mirage Inc (NYSE:MGM) looks the worst out of the three major casino stocks. This stock is not only below the January 2010 highs, but, it has also made two prior lower highs on January 28th and February 17th. Lower highs are usually a sign of weakness and this stock has all of those signs.

When looking at a chart it is important to look for lower highs. When these patterns present themselves they must be watched closely. The casino group is signaling some possible weakness ahead and must be watched closely over the next week.




Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com