Is Star Entertainment a bargain in disguise or a sinking ship? The embattled casino operator's financial troubles have sent its share price tumbling, raising serious doubts about its future. But does the current situation reflect the timeless investment principle of buying when others are fearful? After all, at these price levels, the only way is up, right?

Can Star Entertainment’s demise get any worse?

To answer that, let's examine Star's current challenges. Ballooning debt, declining revenue, and mounting regulatory fines are weighing heavily on the company. Star itself has warned of "material uncertainty" surrounding its viability. In response, lenders have brought in specialist advisory and restructuring firm McGrath Nicol to explore debt solutions—an unmistakable signal of how close the company is to the brink.

Despite the turmoil, some see opportunity. A recent 5.5 per cent stake purchase by a Macau-based Chinese investor has sparked speculation. The key question now is whether this move represents a calculated bet on Star's recovery or simply a short-term opportunistic play.

Is there financial relief in sight for Star Entertainment?

Meanwhile, Blackstone's reported interest in acquiring Star's Brisbane casino could offer much-needed financial relief by reducing debt. However, selling off such a valuable asset could hinder long-term growth prospects.

For aspiring investors, Star's situation embodies a classic high-risk, high-reward scenario. The company's future hinges on successfully divesting assets to manage its debt while finding a sustainable path back to profitability.

Turning to the chart

With the share price down over 95 per cent from its all-time high, the outlook appears bleak. However, if the stock can hold above 10 cents and begin to climb, there may be short-term opportunities. That said, a key level to watch is 60 cents—a critical resistance point since September 2023. A break above this level could signal a potential long-term trend reversal and pave the way for a significant upward move.

Therefore, while a turnaround is possible, investors should be wary of short-term price spikes that can be tempting but often lack follow-through. Patience and discipline are crucial in navigating this part of the market so if you're considering taking a punt on Star, prepare for a wild ride.

What were the best and worst-performing sectors last week?

The best-performing sectors included Information Technology up 3.50 per cent, followed by Financials, up 3.11 per cent and Consumer Discretionary, up 2.25 per cent. The worst-performing sectors included Energy, down 2.41 per cent, followed by Materials, down 1.31 per cent and Consumer Staples, down 0.06 per cent.

The best performing stocks in the ASX top 100 included HUB24 Limited, up 17.59 per cent, followed by AMP Limited, up 10.53 per cent and Pro Medicus, up 9.38 per cent. The worst-performing stocks included Iluka Resources, down 12.94 per cent, followed by Lynas Rare Earths, down 7.25 per cent, and Woodside Energy Group, down 4.93 per cent.

What's next for the Australian stock market?

The All Ordinaries Index climbed over 1 per cent last week, reflecting strong buyer dominance. A key focus was the 8,600 resistance level, which had previously discouraged buyers in early January. However, with the index closing above this level, buyers have made it clear that the all-time high is now within reach.

This bullish outlook is driven in part by the upcoming reporting season, which typically brings a fresh wave of buying. Investors often position themselves early to maximise potential gains from dividends and franking credits available in March.

On the sector front, Financials and Technology delivered strong gains last week, while Energy and Materials took a breather after their recent rallies. If Financials and Tech continue their momentum and Energy and Materials regain strength, the market could be in for another solid week to close out January.

If that momentum continues, watch for the 9,200 level, where fresh selling pressure could emerge. For now, the trend remains strong and stable, making it crucial to stay invested and avoid exiting positions too soon in what has, so far, been a promising start to 2025.

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.