Cruise line shares gained on Monday after the U.S. Court of Appeals overturned its previous ruling that the U.S. Centers for Disease Control and Prevention (CDC) could uphold its conditional sailing order, which placed restrictions on whether cruise lines would ship unvaccinated after July 18. could carry passengers. The development comes at a pivotal time for the industry as it seeks to balance more sailings in the second half of the year without endangering public health as vaccine rollouts continue.
Key learning points
- The U.S. Court of Appeals overturned its previous ruling that the CDC could enforce its conditional sail order.
- Carnival’s stock has turned bullish after the stock broke above a six-week downtrend and came close to regaining the 200-day simple moving average (SMA).
- Royal Caribbean shares closed above the 200-day SMA, which could serve as a catalyst for further buying in the coming days.
Let’s take a closer look at the two largest cruise line stocks in the S&P 500 and analyze the charts to identify potential trading opportunities.
Carnival Corporation & plc (CCL)
With a market cap of $26.8 billion, Carnival Corporation & plc (CCL) is taking over the mantle of the world’s largest cruise line, aiming to have 52 of its ships in operation by the end of the year through a phased return. . Although the company reported a loss of $1.80 per share in the second quarter (Q2), the blow was less than the loss of $3.30 per share in the same quarter last year. In addition, booking volumes for future cruises increased by 45% on a sequential basis in the second quarter, indicating improving conditions on the horizon. As of July 27, 2021, Carnival’s stock is up more than 50% in the past year, but has fallen 17.67% in the past month due to concerns about new strains of COVID-19.
Recent price action in Carnival stock has turned bullish after the stock broke above a six-week downward trendline and came close to regaining the 200-day simple moving average (SMA). In addition, the moving average convergence divergence (MACD) indicator confirms the shifting sentiment, where a cross above the trigger line generates a buy signal. Those buying at these levels should aim for significant overhead resistance in the $30 psychological region. Manage the risk by placing a stop-loss order somewhere below the July 21 low at $21.67.
A simple moving average (SMA) averages a selected range of prices, usually closing prices, by the number of periods in that range.
Royal Caribbean Group (RCL)
Royal Caribbean Group (RCL) plans to gradually increase its sailing schedule through the end of summer and early fall, with a view to being fully operational by the end of 2021. In terms of revenue, Wall Street expects the Miami, Florida-based company to report a second-quarter loss of $4.38 per share, signaling an improvement year on year from its reported loss of $4.38 per share in June. $6.13 per share. Analysts will also be looking for a continuation of the company’s robust booking momentum, with new bookings in March surpassing January and February levels by about 80% due to pent-up demand. Royal Caribbean shares have a market value of $20.6 billion and are trading 60% higher in the past year as of July 27, 2021. However, the shares are down 9.35% in the past month.
While the Royal Caribbean stock price is just below a six-week trendline, Monday’s closing price above the 200-day SMA could be a catalyst for further buying in the coming days. Like Carnival, the MACD indicator recently moved above its trigger line, giving bulls the confidence to test higher prices. Active traders entering here should consider taking profits on a run to horizontal line resistance at $95, while protecting capital with a stop placed below last Wednesday’s low at $75.63.
A horizontal line on a price chart, areas of support or resistance are often highlighted. In geometric analysis, a horizontal line is parallel to the x-axis. In other words, on a perfectly horizontal line, all values on the line have the same y value.
Disclosure: The author held no positions in the above securities at the time of publication.