Macau has been in the dumps for over a year and investors have been looking for a sign that the market is finally hitting bottom. There may be some light at the end of the tunnel after October's gaming numbers were released. The Macau market isn't going to enter another phase of explosive growth, but the fall in gaming stocks may be coming to an end.

Macau's October numbers
October's gaming revenue of $2.51 billion was down 28.4% from a year ago, which seems bad. But it was up from $2.15 billion in September and an average of $2.32 billion in the prior six months. It's only a month, but this could be the kind of upswing investors have been looking for.

Data source: Macau Gaming Inspection and Coordination Bureau.

One reason the gaming market was strong in October was Golden Week, a week when many Mainland China residents visit Macau to gamble. This can create a short-term boost to revenue, much like Chinese New Year does. The opening of Melco Crown's (NASDAQ:MLCO) Studio City at the end of the month may also have drawn some incremental customer growth to the region.  

But there were also some negatives that Macau appears to have overcome in October. The theft of around $13 million from the junket Dore in Macau and news that it is shutting down its rooms in Wynn Resorts' (NASDAQ:WYNN) Macau property could have rocked the VIP market. A number of junkets have already gone out of business and credit to VIP customers could have been squeezed enough to negatively impact gaming revenue. The fact that it didn't is a good sign for Macau.  

The Parisian from Las Vegas Sands will come online in 2017. Image: Las Vegas Sands.

It's too early to call this a recovery, but the chart above shows what might be the beginning of stability in Macau. 

In the nick of time
What's critical about gaming revenue in Macau right now is that supply is about to increase significantly. Studio City just opened, Wynn Resorts is building Wynn Palace that's set to open next year, and Las Vegas Sands (NYSE:LVS) will finish The Parisian in early 2017, plus new projects from MGM, SJM, and a Galaxy addition.

The added supply could cannibalize existing profits if the gaming market doesn't grow -- even a little -- in the next few years. So, investors should be watching for any glimmer of hope that gaming revenue is going to pick up before all of these resorts open otherwise gaming stocks could fall further.

What to look for next
Over the next few months investors will want to watch how gaming revenue develops and where it comes from. Growth in the mass market will bring more stability to Macau and is about four times more profitable for casinos than VIP play. But it'll also be important to see that VIPs don't abandon Macau entirely since they're still more than half the market.

Macau could be on a road to recovery, but one strong month doesn't make a trend so it's too early to say gaming stocks have hit bottom yet.

Travis Hoium owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.