Taking a step away from short ETFs, Wynn Resorts (WYNN) is forming a significantly less auspicious setup right now. Although this stock has been a strong performer in 2011 (beating the S&P 500 by double digits as I write), this casino operator could be headed lower into year-end.
That's because Wynn is currently forming a descending triangle, a pattern that's characterized by a horizontal support level that's acting as a "floor" for shares, and downtrending resistance above. As prices get squeezed closer and closer to support, sellers absorb some of the excess of demand for shares below, weakening support, and increasing the probability of a breakdown.
Wynn pushed below its support level in yesterday's trading. While that's not a sell signal in and of itself, confirmation today would be -- an open below $117 makes Wynn a short candidate. Nearest support at around $105 (adjusted for the firm's $5 dividend payout) is a reasonable near-term target.Wynn is one of the top holdings of Ken Heebner's Capital Growth Management, comprising 1.7% of the portfolio.
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