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Bob Lang of Explosive Options: Oh, we know how the rest of that line finishes. However, I'm particularly interested in the hotel stocks and how they have been performing of late. For reference, there are four main casino names that dominate the Vegas scene -- Wynn Resorts (WYNN), Las Vegas Sands (MVS), MGM Resorts (MGM) and Boyd Gaming (BYD). The first three also have a strong presence in China with hotels/casinos in Macau, the only legal gambling area near China. The growth of Macau has been breathtaking and these casinos are part of it. With a veritable monopoly in the region that growth should continue for years.
The economy in the US has shown some improvement. The success of casinos naturally relies on the health of the consumer. With a robust economy, job growth and positive sentiment we see gamers flock to the tables. The most recent great recession was devastating for the group but they have been making a comeback. LVS has been stuck in a range but is within 10% of a new 52-week high while MGM has been steadily rising for the past month, about 20% off a recovery high, BYD very similar to MGM. WYNN has had more trouble than the others and will need more time to recover.
As the US economy continues to rebound it is the casinos where much of the action will be focused.
My trade ideas: Long LVS February 45 calls for $3.00, Long MGM February 12 calls for $0.96.
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Carolyn Boroden of Fibonacciqueen.com: I took a look at both LVS and MGM to see if there was a technical basis via my Fibonacci work for Bob's optimism in these two Vegas stocks. They both looked good, especially when backing up a bit and looking at the bigger picture. In MGM, the weekly chart illustrates the healthy cluster of price support where the rally really started in October 2011. Since then we've seen quite a bit of follow through to the upside and if we continue to hold above the October lows, the upside potential for that one is the $19.53 area. There are some hurdles on the way up however at the $13.35-$14.90 area.
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