The clock is ticking on Macau longs. The movement in Macau stocks since the beginning of April has been largely technically driven and it won’t last much longer.

A potential for a short term trade opportunity in Macau was pointed out in late January, and since then, the Macau proxy BJK ETF is up 6%. On BJK, I had said that breaking through strong resistance at $37 would mean skies are clear until at least $38, with a decent chance we could see $40 if earnings come in above expectations in late April. At this point, sitting at a $38.83 handle we’re close enough that scaling out for the next trade is probably the wisest move. You may miss the end of the move higher but in the scheme of things it doesn’t really matter, because things are likely to get pretty rough over the summer.

The “wynner” here if I may be punny is Wynn, which at the beginning of April gapped up through both its 50 and 200 day moving averages simultaneously, a classic bullish signal that sucks in all kinds of technical short term traders. This is the first time since 2017 that Wynn has broken above its 200DMA, so dumb money is probably piling in on the breakout. There has been so much buying that the 14 day relative strength index (RSI) has jumped to oversold from weak to overbought for the first time since the major 2016 bottom, excluding a brief anomalous surge in late January 2018. This is causing sentiment to rise to bullish extremes, sucking in more short term traders looking for quick profits.

The situation now is the opposite of what it was in January, when Macau sentiment was bearish and analysts were expecting bad numbers. Sanford C. Bernstein had been forecasting an 8-12% dip in gross gaming revenue for the month, and it came out down only 5%. Now the expectations of a resolution of the US trade war with China are making traders bullish again, which could be setting up for a sell the news type of event when Trump and Xi finally announce that a “deal has been made”. There is no reason for them to announce this any time soon though, that is until both economies are clearly in trouble again. Save the big ammunition for later, as Trump is fully aware that his chances of reelection depend on the “big fat ugly bubble” in his own words being continually inflated. So there is little chance that a deal will actually be announced until the global economy is already in serious trouble, and at that point the announcement of a piece of paper isn’t going to do much.