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Wynn's The Big Winner

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Casinos have rebounded off the lows in style.

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Greetings from New York where I'm beginning to think there was just a tiny bit of shorting going on in those financial and auto stocks. Call me crazy, call it wild trading instinct; I just get suspicious of stocks which move up in 10% chunks every day, more or less regardless of the news.

If you're playing along I hope you have an exit plan and that plan includes "staying at the desk and watching every single tick". This market is the adult swim, Minyans, and they don't sell floaties on Wall St.

Here's what I'm watching as I try not to regret being long a bunch of stocks of companies I think are going bankrupt in the big picture:

  • You want a sharp rally? You want a short squeeze? Forget the banks and airlines and take a peek at Wynn Resorts (WYNN). On July 10th WYNN closed at a 52- week low on huge volume. After the close Steve Wynn, who knows a thing or two about recognizing when gamblers are over pressing their bets, announced adding $500-million to the company's pre-existing $1.2 billion repurchase program. Hearing the news caused traders to flee their casino shorts faster than me leaving Oceans 13. The stocks started ripping. Since July 11th WYNN, MGM Mirage (MGM) and Las Vegas Sands (LVS) are all up over 50%.

  • In what figures to be a much less exciting trade, and after much playing of Hamlet, I bought Costco (COST) at $64ish (for those playing at home). Much as I loathe the warning, COST is the best of the Club stores and the chart has nice looking support in the $60 area, giving me a sub-10% stop. Do I think the consumer is saved? Absolutely not. Which is why I'm not buying the dip in Saks (SKS).

  • Tropical storms with names (the admittedly non-threatening Dolly), bullish inventory news and yet crude still works lower. You can debate the exact location of the line but broken trends generally remain broken for a while. Which is why I never, ever, argue with trendlines on commodities; even when I draw them with crayons.

  • Borrowing from Herb Greenberg, since Herb left the writing gig, the "Hostile-React-o-Meter" continues to whirl on my refusal to buy, or even consider, General Motors (GM). I've got a decent Suspension of Disbelief, folks. I believe in hunches, the hot-hand theory and Mojo. What I don't believe is that General Motors can dump every brand except for the still-invisible "Volt" and successfully restructure itself in a way that salvages shareholder value. My honest congratulations if you caught the GM bottom (very honest congratulations; I also believe in karma). I'm just telling you upfront that I believe GM will be closer to $10 than it is to $20 by Christmas when Santa brings my presents.

  • For it's worth, I sold the last of my Goldman Sachs (GS) this morning. At roughly the same time, my Fast Money buddy Pete Najarian sold his one day hold of Citigroup (C). As we IM'ed to and fro about the trades, we both agonized over brief moves higher in the names, post our prints. The two thoughts are this: First: If your biggest trading problem is agonizing that you didn't catch all the gains, the trend has probably gotten a little too easy. Second: you may believe in Karma, Mojo and respecting the Trading Gods but no one wants to see the gal they dumped start dating George Clooney, if you know what I'm saying.
Position in COST

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