3 Levels to Watch On Wynn Resorts, Limited (WYNN)

Wynn Resorts, Limited's (NASDAQ:WYNN) pullback is being contained by several layers of technical support

by Karee Venema

Published on Sep 30, 2016 at 12:10 PM

Casino stocks have been on fire in 2016, and Wynn Resorts, Limited (NYSE:WYNN) is no exception. The stock is up nearly 42% year-to-date -- and fresh off a Sept. 15 annual high of $109.50. Options traders have responded in kind, too, buying to open calls over puts at a faster-than-usual clip. And while WYNN stock is trading lower 2.5% at $98.04 today, options bulls can rest easy knowing this pullback is being contained by several layers of technical support.

Taking a quick step back, call buyers have been busy in WYNN's options pits in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the gaming stock's 10-day call/put volume ratio of 2.38 ranks in the elevated 85th annual percentile.

Echoing this call-skewed backdrop is WYNN's Schaeffer's put/call open interest ratio (SOIR) of 0.68. Not only does this show that calls outweigh puts among options expiring in three months or less, it ranks lower than 67% of all comparable readings taken in the past year. Simply stated, short-term speculators are more call-heavy than usual toward WYNN.

However, this optimism hasn't spread outside of the options pits. Short interest surged 30.6% in the two most recent reporting periods, and now accounts for a whopping 15.1% of the stock's available float. Plus, more than 69% of covering analysts maintain a "hold" or worse recommendation toward the stock.

As touched upon, though, WYNN has been a long-term outperformer, and today's pullback has found several technical footholds. Going forward, a bounce from these stern levels of support could prompt short sellers to jump ship and/or analysts to upgrade the outperforming stock -- which could create fresh tailwinds. Specifically, WYNN earlier took a sharp bounce from its rising 150-day moving average, which coincides with the stock's 30-week moving average, as well as a 23.6% Fibonacci retracement of its January lows and September highs.

WYNN daily chart sept 30

Meanwhile, Macau is set to release its September revenue numbers within the next week. China's gaming district posted its first year-over-year rise in revenue in August, sending casino stocks soaring in the wake of the results. Shares of Wynn Resorts, Limited (NYSE:WYNN), in particular, surged 4.3%.

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