Betting On A Breakout Can Be A Gamble

On Thursday, Wynn Resorts (WYNN) was upgraded and the firm upgrading the stock said it could be a double within a year.

As might have been expected, WYNN rose 7.48% on the session, closing at its highest level in the past few weeks. While WYNN was the stock upgraded, I believe Las Vegas Sands (LVS) is the better trading candidate within this industry. In sympathy, LVS rose a bit more than 4% on Thursday, but I believe a continuation of recent strength to be much more bullish than what we're seeing on WYNN:

Enter Las Vegas Sands (LVS):

It's fairly clear to me that any close above 40 on LVS is likely to trigger a tsunami of buyers. After a reaction high at that level in late March and early April, LVS has since traded to or near 40 on at least 4 other occasions. Because this resistance level has been tested so many times, a breakout should absolutely be respected. Also, the uptrend off the May low is quite solid as well. Buying above the breakout at 40 or on a pullback to 36-37 both make sense to me. As for WYNN, well I'd consider 70 to be the key price resistance level. But while LVS has been trying again and again to make a clean breakout above 40, WYNN continued trading lower and lower.

What does this mean?

• LVS is the better relative strength candidate in this gambling industry group ($DJUSCA)

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.