Zak Mir on Gaming stocks & the Nanny State!

Call me old fashioned, but I really do not take kindly to Nanny State practices which are enveloping seemingly ever more parts of our lives. They of course include not being able to smoke, drink, eat fatty / sugary foods, drive above the speed limit, drop litter or practically anything else which one could do happily in the good old days of my youth in the 1970s and 1980s!

True, lives are lost through many of the aforementioned practices but what is wrong with live fast, die young mantra?! The latest Nanny State campaign looks to be against gaming / gambling machines, which are apparently very popular among unemployed men in the North East of England. They are also leading to millions of pounds in (benefits) cash going up in smoke – if you will excuse the pun!! Personally, like many of the sins described above, I would not wish to use a gaming machine myself but I do feel strongly that those (foolish) people who wish to blow their money should have the right to do so.

Of course, all of the above is leading up to something and is not Ol Zakky Boy in another bad mood! Let’s take a look at three of the bigger gambling companies, with William Hill (WMH) up first.

Here it can be seen from the daily chart that the beginning of the stock’s woes on a technical basis came with an unfilled gap to the downside through the 200 day moving average – then at 410p. This strong sell signal was then backed by the extended failure by the stock to clear the 200 day line going into January. Even worse, the stock backed the October sell signal with another one, a failure gap fill by just a penny at 412p versus the top of the gap at 413p. The position now is that we are looking at a sharp break below the November 357p floor, with the likelihood being that while there is no sustained price action back above this level we shall suffer a sub 320p target – site of the 2013 price channel floor, perhaps as soon as the end of next month.

While William Hill currently looks to be in the wars regarding gambling machines regulation fears, it would appear that for Ladbrokes (LAD), the jitters are even worse… This is said on the basis of the final near failure below the 200 day moving average then at 205p in September, and subsequent poor price action. Indeed, it would appear that the shares have delivered a near vertical decline from the top of a falling June price channel at 181p just a few days back. The problem now is that while below the initial January support at 161p, there could be further losses for Ladbrokes perhaps to the floor of the 2013 price channel at 140p over the next 1-2 weeks.

Away from the gaming machine issue it would appear that there is not much to celebrate as far as the online gaming groups are concerned either. With respect to Bwin Party (BPTY), we are looking at an extended consolidation by the shares since the summer, largely between 110p – 130p. This would suggest that the smart way forward here is to trade the range, although a falling July price channel, November RSI resistance line and falling 50 and 200 day moving averages all suggest that that here one would probably do best giving the benefit of the doubt to the downside argument. Therefore while below the 50 day moving average at 122p one would be justified in targeting sub 110p once again during February.

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