Las Vegas, Nevada has long been regarded as the “entertainment capital of the world”. Founded in 1905, the frontier city served many different purposes – first, as a water stop for wagon trains in the untamed southwest.
A few decades later, Vegas became the primary residence for thousands of Hoover Dam workers.
Most of whom stayed after the dam’s construction was complete, overloading the small town with plenty of new residents.
Over the next 40 years, population growth increased exponentially, culminating with the establishment of casinos, gambling halls, and gathering spots for some of the city’s more depraved visitors.
Eventually, “megaresorts” staked their claim on The Strip, pushing out organized crime in 1989 and revitalizing Las Vegas’s image.
And with that facelift came publicly traded corporations looking to profit off vice-seeking tourists.
Which, as it turns out, is big business.
But over the last few years, “Sin City” has lost some of its luster.
Tourism revenues are down and for whatever reason, people just aren’t drawn to Vegas like they were in the past. Even worse, local population growth has declined substantially.
In other words, Vegas is having a hard time getting people there to play.
And once they’ve seen it all?
They don’t want to stay.
For the megaresort casino companies like Las Vegas Sands, that’s a big problem. But luckily for us, it’s something we as traders can use to our advantage.
In the weekly candlestick chart above, you can see that LVS could be setting up for a large move downwards. We have the presence of a lower high – something that often signals a downtrend – and the stochastics are “up there” as well.
Even after a recent sell-off.
Most importantly, though, is the descent of the current weekly candlestick. Prices are dropping fast after LVS posted some uninspiring earnings and should shares plunge below the lowest low of the last four candlesticks, it might make sense to go short.
However, there is one thing to be wary of with this setup.
In early June, a higher low was set relative to the low of December 2018. You can see that contact was made with the lower Bollinger Band (BB) right before LVS shares took off.
Now, after running out of steam, they’re curling back downwards for a retracement.
Should LVS shares end up dropping enough to warrant a trade, it would be prudent to keep an eye on both the lower BB and the low from early June.
Unless LVS can breakout below that early June low, odds are that it will just come rocketing back upwards after contact is made.
If it breaks out to the downside of that low, though, then get ready for a plunge to the bottom.
They often say that gambling’s for fools, but thankfully with this LVS short setup, traders have a chance to beat “the house” at their own game.
No longshots needed.
