Thursday, February 26, 2015

WYNN: Bull play, shorter-term rules

The casino resort company Wynn Resorts Ltd. (WYNN), headquartered Paradise, Nevada and with holdings principally in Las Vegas and Macau, China. WYNN broke below its 20-day price channel on Wednesday and continued trading beyond the channel on Thursday, although with little conviction.

[WYNN in Wikipedia]


WYNN, along with nearly all stocks, has been in an uptrend since its Great Recession low in 2009, peaking on Oct. 29, 2014 at $192.45 before beginning a counter-trend correction of major proportions.

In terms of Elliott-wave analysis, the price has completed three waves of a five-wave move. The present wave 4 to the downside will, upon its completion, be followed by a rise to still higher highs.

The sideways nature of the present portion of the correction, as magnified on the right-hand chart, has produced a series of bear signals as the price bounces along. The recent break below the 20-day price channel, marked in yellow, is only the latest of the series.

At this point I know enough to make a trading decision.

Click on chart to enlarge.
WYNN 10 years weekly bars (left), 90 days 4-hour bars (right)
Decision for My Account

It doesn't take elaborate framing techniques like Elliott wave analysis to assess this chart.

Downside support is at $133.58, a level reached on Dec. 17, 2014.

WYNN's break below the 20-day price channel came 7.4% above downside support.

Until that support level, $133.58, is convincingly pierced, I see no opportunity for a bear play on WYNN. I won't be opening a new position.

-- Tim Bovee, Portland, Oregon, Feb. 26, 2015


My volatility trading rules can be read here. For a discussion of the rationale behind the rules, see my essay, "Rules for very short term trades".

The directional score is calculated as the sum of the following:
  • Zacks rating --The Zacks ratings are translated as follows: 1=2, 2=1, 3=0, 4=-1 and 5=-2.
  • Enthusiasm rating --: A single percentage derived from the number of analysts whose opinions are in one of five categories: Strong buy, buy, hold, sell and strong sell.
  • Strong buy share -- The percentage of all analysts who rank the stock strong buy. If the share is 60% or greater, the score is 1; if 40% or less, then the score is -1; otherwise, the score is zero.
  • Ethusiasm momentum -- The score is 1 if today’s enthusiasm rating is larger than the rating 30 days earlier; otherwise, the score is zero.
  • 30-day direction -- The trend that best describes the 30-day chart: 1 for an uptrend, -1 for a downtrend and zero for a sideways trend.
  • One-day direction -- The trend that best describes the one-day chart: 1 for an uptrend, -1 for a downtrend and zero for a sideways trend.

From time to time I use the number 68.2% in using applied volatility to calculate the expected trading range. This comes from statistics and refers to the one standard deviation boundaries, which are expected to contain 68.2% of whatever is being studied. Putting it another way, given an item (a trade or whatever), there is a 68.2% chance that it will appear within those boundaries.

Elliott wave analysis tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.


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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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