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Wynn Resorts Stock: Buy the Dip if It Reclaims This Key Level

Wynn Resorts is getting pummeled again. Is the selling near an exhaustion point? Let's look at the surprising long setup.

Wynn Resorts  (WYNN) - Get Wynn Resorts, Limited (WYNN) Report is under serious pressure, falling 11% on Tuesday and dropping another 11% at the lows on Wednesday morning.

The selling pressure is twofold. First, business remains at risk as Covid-19 remains a threat. And airline traffic has been falling, and if the trend continues, it’s only a matter of time before tourism-sensitive businesses take a hit.

It may be the start of the NFL and college football seasons, but Wynn and its Las Vegas peers may feel the pressure should COVID-19 cases continue to climb.

Case in point? MGM Resorts  (MGM) - Get MGM Resorts International (MGM) Report, Las Vegas Sands  (LVS) - Get Las Vegas Sands Corp. (LVS) Report and others have all been under pressure, too.

That said, Wynn is also hurt by its Macau unit, which is struggling. That’s as Covid-19 cases increase in the region and as increased government regulations continue to weigh on various businesses.

With all that said, there is a potential long setup in Wynn stock.

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Trading Wynn Stock

Daily chart of Wynn stock.

Daily chart of Wynn stock.

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The struggles that Wynn has been facing aren’t a secret. At Wednesday’s low, the shares were down more than 20% in the past two days.

In early June, Wynn stock looked pretty good as it was trending higher, was above all of its major moving averages and was breaking out over downtrend resistance (blue line). 

Then the shares puked in mid-August, bottoming at $87.52.

After a run back over $100, the stock is being slammed lower again, gapping below $87.52 on Wednesday. 

Should Wynn stock reclaim this level, aggressive bulls will want to be long.

In that scenario, bulls can use Wednesday’s low as their stop-loss.

Back above $87.50 puts Tuesday’s low (and the gap-fill) in play at $89.25. Above $89.25 and we could see a push to some of Wynn’s short-term moving averages, followed by the $100 level and the 50-day moving average.

If the stock can’t reclaim $87.50 — or if it does but again loses this mark — Wednesday’s low will be vulnerable. 

Should the selling pressure continue, we could see a dip down toward $70, which was very solid support in the third and fourth quarters of 2020.