LVS Trade Follow Up

LVS was mentioned twice, once the day before earnings and then about 30 minutes before the close and earnings, both assessments were LVS would not react well to earnings and became a short trade.

Today was a good day for our short n LVS, down nearly 4% and off about -14% since we looked at the trade.

This looks to be a promising trade so we ant to manage it well.

 You hear the phrase "false breakout" a lot, but this is th typical reversal setup, whether it be an intraday move above a resistance zone or a bigger daily move like this one in which a breakaway gap was providing resistance. The fill of the gap which you can see above would have negated the "breakaway gap" which is a powerful gap for a reversal down. To see it filled, a lot of traders would have turned bullish on LVS. Luckily we not only had a good read on 3C, but a very typical earnings leak.

To the far left (I didn't mark it, but you should be able to make out the positive divergence at the lows), the positive divergence kicked off a rally that was used to sell LVS short by Wall Street on a pretty obvious earnings leak. Again, this is counterintuitive thinking, but to see LVS rally into earnings would have given a lot of traders a positive earnings expectation. This is one of the more typical negative earnings set ups I see, when earnings are going to be positive, often the stock will sell off into earnings if there is a leak so Wall Street can accumulate at cheap prices, this was the opposite. Since the false breakout followed by disappointing earnings, LVS gapped down and consolidated for a few weeks. The leading negative divergence did what it is expected to do, lead price lower.

Much like PCLN, we have a decent area of support coming up. Not only was this support level the end of a pullback, it also rallied well off the loss and closed near the top of the daily range. We're only a half a point or so away so this may hang up LVS in a consolidation/bounce. The one thing we have working to our advantage is today's higher volume move down which closed at the lows of the day, this could create follow through selling and slice through that support level. If you're in the trade, we'll want to watch how 3C reacts at support. Once LVS drops below $36, we should see some real downside momentum. In fact if we do get a bounce off support, LVS would be a good candidate to add to or to initiate a short on.


Just so you can see the potential..

Sub $20 is not unreasonable, even $10 is not out of the question. The $36 area I would consider as part of the top, so below $36, the pattern implied target is around $16!!!