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Why it may be time to cash in on this casino stock

Casino stocks are on a cold streak. And according to the latest data out of Macau, it may not get better anytime soon.

October gaming revenues in Macau sank 23 percent compared with 2013. That is the largest year-over-year drop in its recorded history. Being blamed for the decline are a slowdown in mainland China's economy, a recent smoking ban and a crackdown on corruption that is keeping VIP players home.

Investors greeted the news by cashing in their chips on Wynn Enterprises, MGM and Las Vegas Sands. All three fell between 3 and 4 percent on Tuesday.

For names such as Las Vegas Sands, which gets more than 70 percent of its revenues from Macau, the news is particularly troubling.

But one market watcher isn't too worried. According to Gina Sanchez, founder of Chantico Global, Las Vegas Sands investors shouldn't be too worried, particularly about the recent drought of VIP gamblers. That's because the company is looking to diversify its customer base in Macau.

"They're going after the mass market, which is more of the middle-class gamers," said Sanchez. "That actually could be its saving grace."

But the charts are not as positive, according to Steven Pytlar, chief equity strategist at Prime Executions. He sees the stock as now testing a critical support level at $59.85 per share.

"On the chart, we see that this was a high on two tests previously in recent years," said Pytlar, referring to Las Vegas Sands' March 2012 and May 2013 highs. "When you have a stock that broke past two major highs and is now coming back to retest those highs, that tells you there is a lot of deterioration in the stock. It tells you there is a lot of sellers and not a lot of buyers."

The technical implications are that Las Vegas Sands' stock could potentially move lower, Pytlar explained. "We could see more selling pressure," he added. "If it falls below those two prior highs, we could see it potentially fall significantly more. We would be staying away from this stock right now based on the charts."

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