One area to explore within the “great re-opening trade” is through the casino gambling space. While these stocks have received a fair amount of attention (and thus, returns) over the past number of months, there may be a case to be made for watching the sector for pullbacks. Continued stimulation and spending by the US government puts money into the hands of the masses. As we’ve learned with the new groups of investors entering the markets via platforms like Robinhood, this easy money can be more subject to gambling and risk-trading than old-fashioned earned income. That might spell continued upside for casino stocks, particularly as the USA re-opens aggressively. Today, we’ll look at the charts of some of the more dominant names in the sector with technical commentary.
As the USA opens to new levels of freedom, businesses like airlines, hotels, gambling and leisure are fast approaching their pre-COVID levels of activity. The re-opening of the USA has been ramping up full throttle since February, as vaccine distribution ramped up. Its clear that “Operation Warp Speed”, initiated by the previous US administration in the summer of 2020, and carried forward by the current US administration after the January 20th inauguration was successful. Here are a few charts with commentaries:
PENN is pulling back to initial support near $75 after signaling an overbought status when it hit the mid $140’s. There is a potential for technical erosion – given the break of its 200 day SMA and a potential “bearish cross” of the 50 day SMA moving lower. Still, if $75 or thereabouts holds, it might be expected that the stock will rebound along with the group. That’s alot of “what-if’s”, but worth keeping an eye on.
MGM broke through a long lid near $34 and rode the train right up to $42 of late. Momentum is rolling over, so we may see some giveback. But long-base breakouts like this can often be very bullish.
LVS, below, is a fantastic trading stock. The clear support and resistance zones provide plenty of opportunities for traders willing to keep it on their watch lists. Buying in the mid-low $40’s and selling in the $70 area has been a repetitively profitable trade on this stock.
Canadian re-opening stocks
There will be opportunities that present themselves in the Canadian sectors noted above – but the timing of such trades may be delayed. In my opinion, there will be a substantial enough lag to suggest monitoring the situation before aggressively initiating new trades in the sectors noted above. As a background to this delay: The Canadian administration closed parliament mid 2020 while other governments remained on task and secured vaccines. Canadian government -supported media promoted US travel as “risky”, failing to mention the rapidly distributed vaccines in the USA vs the failure in Canada. Evidence now shows just how far ahead the US re-opening plan was when they initiated Warp Speed in mid 2020. More vaccines, declining COVID, progressive re-opening. This, while Canada, ironically, proved the “risky” place to travel as the CDC put us on the blacklist and removed the USA from it. Case in point, ValueTrend purchased both Delta and Air Canada in our Aggressive Platform as a play on North-American re-opening of travel. Guess which play has been better?
Now: The same biased media reports Canada’s “catch-up and potential surpassing” of US vaccine distribution. Untrue: as of 1 week ago- Canada was similar to the USA at 60%+ first vaccine but.. not so well reported…only at 5.1% “fully” vaccinated. This – vs the US at 62% first vaccines and (more importantly) an outstanding 41% fully vaccinated status. This of course ties into the failure of the current Canadian regimen to procure vaccines, and the subsequent “experiment” on Canadians to see what happens if we ignore the Pfizer / Moderna recommended 3-week dose staggering – stretching it instead to 2-4 months.
For this reason, I am wary of differing time horizons, the effectiveness of the altered vaccine protocol, and the impacts on investing in Canadian industries that would require “vaccine passports”, vs .the re-opening strategies in the USA. Its going to be a while for Canada, methinks.
BTW …. I should mention that if you don’t like these government policy tidbits & truths I occasionally throw into my analytics, don’t bother posting a comment or sending an email – it will be ignored and deleted. Its the price of admission of this otherwise free source of financial commentary.
Once again, your insight is greatly appreciated.
This liberal government failed miserably in the vaccine procurement front. Our bias media are so blind to the facts. Trudeau was more interested in dealing with China. Now he is trying to ram Bill C-10 down our throats. This will effect you if he feels you are saying things against his government. He will have the power to shut you down. Wake up GTA and Quebec.
Through history, Marxism (Eastern bloc) , Communism (China, Cuba, etc), Dictatorships (Nazi Germany, etc) have spread through controlling the narrative. Control of the media, control of debate, control of free speech, control of historical knowledge (cancel culture) and control of the rights to protest (Tiananmen square)- all are present in Canada right now. A friend of mine escaped from Poland during the dark days, lived on a park bench and managed to procure a job at McDonalds eventually earning the right to citizenship – no free lunch for him- he spends time warning others that everything he left Poland for is starting to worm its way into Canada via the current regime. He is terrified.
Regarding the sectors of airlines, hotels, gambling and leisure :
There is a newer Cdn ETF that covers a basket of these (from Harvest)
Great info Andy–thankyou–probably worth a look at the end of the summer as progress is (hopefully) made re the second vaccine, etc
FYI Keith : TRVL trades on TSX, but contains mostly U.S. stocks (ergo, it tracks American re-opening).
Q on re-opening : if I have a large position in XEG, would TRVL be overkill? I mean, if I’m invested in oil stocks, aren’t I already positioned for growth in travel?
You are correct on that Andy–they are related plays