Wynn Resorts (WYNN) is a gambling stock with nice trending runs in both directions. In a favorable scenario, owning this stock could allow you to make some significant gains in a short period of time. However, due to the stock's volatility, it will need to be traded as soon as it rolls over in order to capture any gains.
The first signal we're seeing for an entry into the stock is a full stochastic signal. This move above 20 is starting to accelerate higher. Looking left on the full stochastic indicator, we can see that the full stochastic is firing off a lot of false signals down around the 20 level.
One of the signals that helps to complement the full stochastic turning up is the PPO. I have placed arrows on the PPO to show where the indicator has turned up around the zero level. Two PPO conditions are important to note; the PPO positive cross with the signal line and the positive cross around zero. The PPO turning higher near zero in early 2017 was a nice place to get long with the full stochastic signal moving up. The same setup is occurring now.
I also like that the SCTR pushed up above 75 in April 2019 before then pulling back; it now looks like it is trying to go higher again. This is often seen when a stock starts to pick up momentum, pulls back and initiates another surge. On the second surge, should the SCTR can get up to overbought, it would make for a nice confirmation of a good trade setup. That will take a few more weeks to play out.
Lastly, the price bounced off horizontal support at $100. The price action moved above the down-sloping 40-week moving average and still needs to get above the 10-week moving average. With the combination of the bounce off of support, the PPO turning up near zero, the SCTR bouncing strongly to push back up and the full stochastic sending an entry signal, this chart looks very good.
What is also nice about the trade is that we can set a stop to help us manage risk that doesn't need to be too far down. I would probably put the stop near $100 to give it some room. While that is a bit of a wide stop, it is where the low of two weeks ago held. If that fails to hold, that would suggest there are bigger issues with the stock - I'd let some else own it in that scenario.
Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts For Dummies
Want to stay on top of the market's latest intermarket signals?
– Follow @SchnellInvestor on Twitter
– Connect with Greg on LinkedIn
– Subscribe to The Canadian Technician
