Pent-Up Degen

A flurry of visitors (and I would imagine quite a few locals) descending onto Las Vegas for its long-awaited reopening is getting plenty of play in the press, and rightfully so--It has been a tedious, draining couple of months in American history. And those who enjoy going to the casino for excitement and stimulation were probably cringing at the thought of watching one more show in Netflix. 

As we have been noting on this website and with Members, an initial reopening pop is not surprising. Case in point: The likes of LVS MGM WYNN are all higher as I write this, even as the major indices are fading off session highs. This is also happening on a day when AAL BA CCL UAL, and other "problem spots" this market has worried about for months are also surging on general hopes of re-openings putting an end to destructive city looting and riots and, of course, the absence of an imminent second wave of virus outbreaks. 

After this initial pop, however, I expect reality to set in: The reality of lingering high unemployment, the lasting trauma of a multi-month lockdown followed by race relations as strained as they have been in this nation since the late-1960s. 

Could WYNN, below on its daily chart, have a rendezvous with its 200-day moving average (yellow) in the same way the Dow and small caps have, before reality sets in? It sure could, which is why shorting is never easy even when it seems like the stars are aligned for the bear thesis to materialize. 

But looking out six-to-eighteen months, the same concerns I voiced a few weeks back about the gaming industry remain, at least as far as brick-and-mortar casinos like LVS MGM WYMM in lieu of the new stud, DKNG. In other words, good for Vegas for reopening. However, it is not a panacea, literally and figuratively.