A look across the cruise business is always interesting. From the smaller vessels to the large city like structures floating around the world, there is a wide disparity in the experience people sign up for. If you like cruising, it can take you to wonderful places without the hassle of moving your suitcase to see different cultures in different countries.
We’ll be taking a cruise soon, so I thought I would check in on the technical chart patterns for the three main cruise line competitors that are publicly traded.
Starting with Norwegian Cruise Lines, you can see why I suggest the cruise ships are going nowhere. The $60 level has been a ceiling for 5 years. The chart is leaking water now, moving under $50, and momentum shown in the lower panel is below zero and dropping.
As a bit of a comedic commentary, I have to tell you that their frequent traveler programs are well below my expectations. After almost 60 nights, I am close to earning a free load of laundry as the next big level of achievement, so that’s not very aspirational! Call me a sceptic on the value of those programs unless you’ve slept on the boat for a year or more.
Next is Carnival Cruise Lines. This chart is clearly in a downtrend. The relative strength (RS) compared to the S&P 500 is pointed down on the purple area panel. It has been underperforming the $SPX for two years and it is currently make five-year lows in RS. That’s just ugly. With the stock at 3-year lows, it is hard to want to buy it here. I would need to see the purple area chart break the down trend and the momentum line on the PPO indicator break that downtrend to get interested.
This will need some big institutions to start buying it for value, but it is not constructive in any way right here. If it turns and starts to make three month highs, then a person could look at it, but it is making fresh lows this week.
The third cruise line is Royal Caribbean Cruise Lines. On the top panel of the chart, you can see the stock approaching three-year lows in relative strength. Fresh lows in relative strength is not bullish. The full stochastic indicator is usually the first thing to turn up on a weekly chart but we can see that is pointed down below 50 right now which is also a sign of a weak stock.
On the price chart, the ceiling at $130 has been there since 2017. Now we are testing the low end of the range around $100. In the big declines from the 4th quarter of 2018, we saw the RCL stock drop down to the high 80’s. If you like to buy at support, this chart might be one to look at but the peer group suggests there is no real momentum here.
The bottom line is these companies may travel the world but the shares are going nowhere right now. In all three cases I would want to see the downtrends in PPO momentum break at a minimum.
If we get a 4th quarter rally, the RCL chart has been tighter and generally stronger, but it’s a boat race of weak stocks.