NEW YORK (TheStreet) -- As is often the case -- and the case in the casino sector with Wynn Resorts (WYNN) - Get Report -- news often follows the patterns predicted. Get ready for this casino stock to rise.
This monthly chart shows that the trouble began in early 2014, near 235, and has been worsening ever since. The recent news about this sector is interesting, but is not the cause of the 74% slide in the last year and a half. The herd's mood toward this company changed as the stochastics peaked above the 90% overbought extreme, and accelerated once the stochastics plunged back down through the 90% threshold, and entered free-fall conditions, where the herd realizes they've been fooled, again, and there are no greater fools left to keep the mania moving higher.
Now, down in the 60 area, the decision support engine indicates that the stock is a "buy" right now. The last time this particular indicator was this oversold was the 2012 low, followed by the 2009 low. Both instances had news stories associated with them, which also came near the terminations of the declines, not the beginnings.
Odds are now extreme that the 55 +/-8 zone will provide at least a multi-quarter to multi-year rally, along the path of the blue arrows. The red arrow's declining path can't be ruled out, yet, but doesn't even come into the realm of possibility until the initial phase of rise matures into the pink box, which is 100% higher than the current pricing, and likely 18-24 months from now. Therefore, the only path of interest is that of the blue arrows.
The decision support engine strongly recommends the following parameters be used to support buying actions. If flat, buy stops can be used at 70 to establish long exposure, as well as into the low to mid 50's. If already long, maintaining and/or adding is suggested using these parameters. If short, protective actions should be taken no later than the 70 level, to lock in short profits, before they erode with the coming price rise.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.