And who would have thought they could ever raise the Titanic? Why, the $CCL bulls! That’s who. (April 27, 2020)
Carnival Cruise ( NYSE: CCL ), it’s still not going; motors are still idling, not even idling; boats are just kind of sitting around doing nothing; they are probably getting sanitized, we don’t know.
Here’s the deal: The stock today is up 10 percent. I’m like Columbo, I’ve been on the case here for a long time on Carnival ( NYSE: CCL ) not expecting this stuff to rally big or anything like that. I will give you the analysis real quick; RCL ( NYSE: RCL ) is kind of the same thing, we’ll get back to that in a second.
After this stock ( NYSE: CCL ) made a lower low and then started running up, you look at it on a Bollinger Band analysis you can see how while this was a lower low, relative to the price, it was actually a higher low relative to the lower Bollinger Band, which was clear down here. This low was much higher above the lower Bollinger Band than this one was. This had been running along the lower Bollinger Band for all this time and then you get a rebound. And then, oh my gosh it’s a lower low. But it’s really not.
It is really about as close as you can come to it being a double bottom. And then the stock trickles higher but then it just drifts sideways because, after all, it’s the COVID, who knows what’s going to happen with cruises?
The company is deeply in debt; not that there is anything wrong with that, it is just that companies that own massive floating hotel resorts need a lot of money to do it and they count on cash flow. It’s a cash flow business and suddenly there is no cash flow, there’s nothing. It made the Titanic seem like a safe bet. Then the stock is just drifting sideways and all the while we don’t know whether this stock or when this stock is going to move higher.
I just have a good sense that it is not going lower. This is a stock that at Option Market Mentor we have had trades on. We have had covered strangles, we’ve had covered calls and we’ve had short puts. All because of this idea that this stock is probably not going to go back into the red box. We don’t know when. We don’t know what the timing is that the stock is going to move higher. We just have a pretty good guesstimate, and it is a guesstimate, that the stock is not going to fall, say, below $11.00. And so today is the breakout day, up 10 percent.
Do I think it’s too buy Carnival ( NYSE: CCL )? Well, typically I wouldn’t buy a stock that is up 10 percent. Here I already own it so I don’t have to make that decision. You, I think it is still okay to buy. Royal Caribbean ( NYSE: RCL ), the same kind of thing here. The stock broke up nicely on decent volume today. I don’t think you are too late to buy here even though the stock is up over 11 percent.
I think, personally, these stocks are good risks right now, and this is not my typical trade. If you have been watching me for a while you know what I like. I don’t like to buy these things that have been kind of down in the dump. I like to buy the winners and assume they are going to keep on winning but these patterns are just a little bit too juicy for me to pass up.
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