Casino stocks, among the hardest hit early in the coronavirus pandemic,- have bounced hard off their lows.
Their recovery is not over yet, says Ari Wald, head of technical analysis at Oppenheimer.
"Typically at market turning points you're going to see investors embrace the most beaten-up laggards. For the S&P casinos industry, we are seeing that stability over the last eight weeks. I think you test the underside of that 200-day," Wald told CNBC's "Trading Nation" on Monday.
The S&P casinos' subgroup would need to rally nearly 26% to reach its 200-day moving average.
Still, Wald cautions that he is not ready to back the casino stocks over the long term.
"It's really just a beta trade. Yes, they overshot to the downside, getting some relief to the upside, but there's some longer-term concerns. We think instead the premium is going to be on high-growth companies in this low-yielding recovery."
One name in the casino space appeals to Boris Schlossberg, BK Asset Management's managing director of FX strategy.
"The markets are betting on a rebound in Macau. LVS dominates. It's the largest operator in Macau, and the difference between Macau and Las Vegas is the money in Macau is really made much more from gaming rather than entertainment," Schlossberg said during the same segment.
Gaming revenue in the gambling destination Macau plummeted 93.2% in May. Stocks rose, however, as traders looked beyond the drop to signs of recovery.
"The return to Macau is going to be much more rapid than the return to Vegas and much more manageable, more supportive from a casino point of view," he said. "Therefore, if you're going to make the bet, make the bet to LVS because that's going to be the profit maker for them, not Vegas but Macau."
Revenue for Las Vegas Sands' Macau operation hauled in $8.83 billion in revenue in 2019, 63% of LVS' total last year.