Wynn Resorts Ltd (WYNN)

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One Industry That's Failed Miserably During Earnings Season
By: Tom Bowley | May 8, 2021

I could provide a solid list of earnings season failure nominees like semiconductors ($DJUSSC), software ($DJUSSW) and medical equipment ($DJUSAM). However, I'm going to give the award to gambling ($DJUSCA). Since the big banks kicked off earnings season on April 14th, we've seen 8 gambling stocks with market caps greater than $1 billion report their quarterly results and, quite honestly, Wall Street hasn't cared a bit. The initial reactions have been strong, with 6 of the 8 gapping higher at the opening bell after reporting results, but, by day's end, only 1 gambling stock was able to close above its open. Additionally, on average, these 8 gambling stocks lost more than 4% from opening bell to closing bell. That's the opposite of accumulation and is cause for concern.

Technically, we saw the DJUSCA close on Friday at its lowest level in the past 2 1/2 months:



The daily PPO has taken a very bearish turn to the downside, while price support from recent lows has been lost. Throw in the deteriorating relative strength and it's easy to be bearish this group right now. The only gambling stock to have closed above its open - a possible sign of accumulation - is Red Rock Resorts (RRR). Everything on this chart remains very bullish. If you're going to own a stock in a weak industry group, make it the one with the best relative strength - like RRR:



Happy trading!

Tom

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