Your Blueprint for Trading Las Vegas Sands (LVS) Earnings Report

Casino operator Las Vegas Sands (NYSE: LVS) reports Q4 2019 earnings after the close on Wednesday, Jan. 28, 2020. Analysts expect $0.78-earnings per share (EPS) on revenues of $3.372 billion. Casino stocks have been bludgeoned in the past week from Coronavirus contagion fears. This was further underscored by the Macao government reporting an 80-percent drop in visitors from China for the much-anticipated Lunar New Year. Further travel restrictions imposed by China and even the U.S. can continue to curtail headcounts. The Coronavirus has created a temporary sympathy group of affected stocks that include casinos, hotels, food, leisure and travel stocks. This makes LVS earnings and forecast even more significant for the affected industries. LVS will be the template for recovery or sell-off for this group with the key point being sentiment. How will LVS shape investor sentiment?

Macro Context and Influences

The S&P 500 ETF (NYSEARCA: SPY) is our macro market indicator. LVS reports after the events of the Federal Open Market Committee (FOMC) rate announcement and Q&A session earlier in the day scheduled at 2:30 pm EST on Weds. Jan. 28, 2020. The market headwinds generated by the FOMC event may set the risk-on or risk-off tone heading into LVS earnings post-market afterwards.

Technical Analysis

Utilizing the rifle charts, LVS has a monthly mini pup pattern with 5-period MA support at 63.18 and 15-period MA support at 59.87 overlapped with 0.382 and 0.618 Fibonacci (fibs) retracement levels. The weekly stochastic peaked at the 74.16 fib level and gapped down to the 61.12 super fib bottom setting the range heading into earnings. The daily stochastic completed a full oscillation down to the 20-band awaiting a crossover bounce to retest the daily 5-period MA. The 7-trading day range has set the initial envelope [1] at 61.12 x 69.68 fibs. The next range [2] is the 58.50 fib x 74.16 fib. The widest range [3] is the 57.52 x 77.51 stinky 2.50s range. This final range may take weeks to reach after the rest of the peer casino stocks report their earnings results.

Sympathy Stocks:

The direct casino sympathy stocks with properties in Macao are Wynn Resorts (NASDAQ: WYNN) and MGM Resorts International (NYSE: MGM). These three interchangeable stocks move lockstep with each other like clockwork. Typically, the order of action goes top-down with WYNN, LVS then MGM. Keep in mind WYNN is scheduled to report earnings the next day after the close on Jan 30, 2020.  Expect LVS to also react on WYNN earnings.

If LVS shares exceed a 10-percent gap up or down, then lower-tier casino stocks Caesars Entertainment (NASDAQ: CZR), Boyd Gaming (NYSE: BYD) and Penn National Gaming (NASDAQ: PENN) may get some action, but keep in mind these are regional domestic operators with muddled correlation with the big three. Additionally, Coronavirus impacted stocks may continue to rally in sympathy, these include Marriott (NYSE: MAR) which derives nearly 8-percent of total revenues from China and Hilton (NYSE: HLT). Meat and poultry distributor Tyson Foods (NYSE: TSN) has also shown to have a positive correlation with the Coronavirus group of stocks.

Trading Game Plan:

Due to the nearly 13-point range that LVS has traded between in just 6-trading days, market reaction to earnings may be muffled. The 67.07-to-67.60 fib daily gap fill is a magnet if the daily stochastic can crossed back up off the 20-band. Utilizing the aforementioned three price envelopes, reversion shorts on the second gapper reactions can be taken at the 69.68, 74.16 and 77.51 on the first tests. Reversion longs can be taken at 61.12, 58.50 and 57.52 on the first price tests.

Keep in mind, there’s no guarantee these levels will test, but if they do then a trading opportunity presents itself at these price inflection points. Be conscious of slow grinds after 10am EST to form on the 5 and 15-minute rifle charts. Focus on the reactions, not the reasons for the price moves. Again, it’s possible that volatility gets muddled in a tighter range of the first envelope. In that case, stick to scalping just the morning session and stay out of deadzone. Further follow through on LVS may occur after WYNN reports earnings on Thursday. Remember that we focus on the reactions, not the reasons for the price moves.