In my T2108 Update on October 5, I asked whether the last bear market would really last just one day (so far, so good!). In that post, I noted that Wynn Resorts Limited (WYNN) had suffered an important breakdown and concluded:
“This breakdown swiftly moves WYNN from the bullish camp into the bearish camp. On rallies into resistance – like the converging 50 and 200DMAs – it makes sense to establish bearish positions in WYNN as a hedge against an otherwise bullish portfolio. If things get really ugly, WYNN has a LOT of room for falling down.”
Today (Oct 13th), WYNN ran into a brick wall right at the converging 50 and 200DMAs after a nice 27% rally from the recent lows. The chart below shows how the 50DMA served up perfect resistance that in turn transitioned into another breakdown below the 200DMA on high volume. This drop is essentially a follow-through to last month’s breakdown and confirms the bearishness of WYNN’s chart. Only a rally above the 50DMA will negate this bearish call.
Source: FreeStockCharts.com
Further supporting immediate downside are overbought stochastics.
I am now short WYNN via puts and expecting a rapid erasure of the previous bounce before the stock continues to grind lower.
Be careful out there!
Full disclosure: long WYNN puts