The Trading Plan For Today - 11/11/08

Tuesday November 14, 2008
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Shares of Wynn Resorts (WYNN) climbed over 5% in after hours trading yesterday, after Standard & Poor’s announced that it will add the company to the S&P 500 index. Stocks tend to rally on such news as it is assumed that money managers who try to track the stock market or match the performance of these indices, will buy the shares of the stocks being added.

This may not necessarily be the case that much these days as there are now single instruments money managers can buy that can effectively track the entire indices.

We have had Wynn Resorts (WYNN) on our watch list as a shorting candidate for the past six weeks and from intra-day lows of $41.50 on Friday 11/07, Wynn shares might open up $2.43 to trade at $49.25 today. That creates a great shorting opportunity in this market environment.

There is one caveat. Las Vegas Sands (LVS), which lost half its value last week after the company’s auditor issued a concern about the company’s viability, announced yesterday that it has reached an agreement to raise $2.14 billion and that it will announce the closing of this transaction by the end of the week.

This successful capital raise is good news that could see WYNN tack on a couple points in sympathy, which could mean traders might be entering too early if they entered into a short trade at this point. On the other hand, we are looking for the markets to have a bearish tone this week and WYNN should pull back some before Thursday.

If the stock opens up and the overall market is bearish, then short and look to exit once the stock is down 5%. After the Las Vegas Sands (LVS) announcement, traders can enter into a short position again.

Tags: Wynn  Las Vegas Sands  Trading Idea  Trading Plan  S&P 500