The early December market swoon created a lot of opportunities for short-term traders and value investors alike to pick up some nice bargains. While major market indices have already fully recovered and trade in all-time high territory, Santa has yet to visit every stock. 

Casino stocks were hit particularly hard this month and still have a lot of room to go to recover their losses. 

Wynn Resorts (NASDAQ: WYNN) is a good representative of the entire sector. On Dec. 17, it gapped down on the open and continued to slide, hitting yet another new low for the year. But midday, the bulls suddenly woke up. The stock closed near its high for the day, and that left a bullish hammer candle. In Japanese charting lore, the market is said to be “hammering out a bottom.”

Basically, something happened in the middle of the day to change the tide. What was an undesirable stock became desirable, and from a charting point of view, it does not matter what that something was.

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The next day, WYNN jumped up at the open leaving an island gap reversal. Specifically, since it took place in one day, it is called a bullish abandoned baby formation. This showed sellers were exhausted on Dec. 17, and buyers reenergized on Dec. 18. It was the best technical evidence for a bottom all year.

Even better, when viewed on longer-term charts, that week’s action also formed a weekly hammer candle. So far this holiday-shortened week, there has been upside follow through, and that suggests that the larger time frame is bottoming as well.

To be sure, the major trend from February is still to the downside. We have evidence it may be turning, but until the trendline is broken to the upside we do not have confirmation. But that does not mean there is no short-term opportunity to be found. 

It looks as if WYNN can bounce back to the trendline and top of the bearish channel guiding it all year. 

Note resistance in the $170 area from the bottom of a failed attempt to form a base earlier this year. The trendline from February should fall to this area in three months’ time. It is a compelling price target and time frame, but given the rate of descent in November and December, the rebound is likely to have a steeper rate of recovery. I think WYNN has the potential to complete a move to $170 in half that time.

Recommended Trade Setup:

— Buy WYNN at the market price 
— Set stop-loss at $145
— Set initial price target at $170 for a potential 13% gain in six weeks

Note: Over the past year, one little-known indicator spotted 29 stocks right before they jumped double digits in a month. Now, it’s tagged another stock as an immediate “buy.” In fact, it’s flashing the same kind of buy signal as a stock that rose 266% in a year. Get its name here, including all the details on this indicator.

This article originally appeared on ProfitableTrading.com: Casino Stock’s Rebound Could Land You Double-Digit Profits in 6 Weeks​​