The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is up nearly 10% this year and hit another all-time high Thursday. Things have not been so sanguine for consumer discretionary industry exchange traded funds, including the Market Vectors Gaming ETF (NYSEArca: BJK).
BJK, the lone ETF dedicated to casino operators and related fare, is off 3.7% this year and has trailed XLY mightily over the past 12 months. Over that period, the broader discretionary fund is up 17.5% while the gaming ETF has lost a quarter of its value. [Two-Deck Shoe: Dueling Views on the Gambling ETF]
A look at BJK’s charts indicates the ETF could finally be getting to turn for the better.
BJK “is now attempting to reverse a 16-month bear market and has already moved above short-term moving averages (see Chart 1). While this ETF is rather thinly traded – making it a risky investment instrument – it is useful for tracking the performance of the global gaming sector,” reports Michael Kahn for Barron’s.
BJK has been hampered by retreating gaming data out of Macau, the world’ largest gambling hub. China is BJK’s second-largest country weight at 13.2% and Macau is a Chinese territory. casino industry has suffered a huge blow to VIP gaming after President Xi Jingping enacted a campaign on widespread corruption, which included thousands of officials and executives at state-owned enterprises. [Macau Illegal Transaction Crackdown Puts Gaming ETF in the Red]
Macau has been pressuring BJK since last year. In 2014, gamblers stayed home to bet on the World Cup. Limited access to smaller smaller junket operators, who extend credit to gamblers, is also weighing on the market.
U.S.-focused gambling stocks have not been anything to write home about, either. Las Vegas Sands (NYSE: LVS), Wynn Resorts (NasdaqGS: WYNN) and MGM Resorts International (NYSE: MGM) have posted year-to-date losses of 5.6%, 30.2% and 12.6%, respectively. That trio combines for 18.4% of BJK’s weight. Technical hope has arrived.
“Most big gaming stocks mirror the pattern of the ETF, with bullish divergences between price action and momentum readings such as relative strength index (RSI). Even as price made lower lows, the indicator started to rise, and it is usually price that turns to follow its indicator. Trading is still well below the 200-day moving average, signifying a lingering downside bias, but the average looks to be a good target for a bounce,” according to Barron’s.
Market Vectors Gaming ETF
