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Is Carnival a Buy as It Hits New 52-Week Highs?

Carnival shares hit a new 52-week high after the company provided a business update for investors. Here's what the charts say now.

Cruise stocks have found themselves in the spotlight once again, with investors focused on Carnival  (CCL) - Get Carnival Corporation Report on Wednesday.

The company provided a business update for its investors, tipping its hand that pent-up demand will be present when cruising gets underway once again.

Despite excellent vaccination progress in the U.S., it was thought that sailing may not return until far later in the year

Then Norwegian Cruise Line  (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report laid out plans to begin sailing on July 4.

That helped send its stock higher, although questions still remain on whether it can maintain momentum.

Carnival has a similar setup. While shares have been trading much better lately, the stock isn't yet out of the woods.

Of course, a return to cruising will give a much-needed boost to the bulls, who have been leaning on the cruise industry as a way to play the reopening of the economy.

Trading Carnival

Daily chart of Carnival stock.

Daily chart of Carnival stock.

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Carnival has been trading well lately, riding a four-day win streak and up in seven of the past nine trading sessions - provided it closes higher on Wednesday.

At Wednesday's high, shares were up 28% from the March 25 low when they opened at the 50-day moving average and rocketed higher.

Like Norwegian, the stock continues to respect its key retracement levels. At first the 38.2% retracement resistance and now it’s support. Currently, the 50% retracement has been resistance.

While the stock pushed to new 52-week highs on the day, Carnival stock was rejected from the $30 level and the declining 100-week moving average.

If shares remain under pressure, investors will want to gauge just how serious bulls are at this point. Meaning, they’ll want to see what level draws in the buyers for support.

Do they step in at the 10-day and 21-day moving averages, providing only a shallow dip and keeping the $30 level in play? If so, we have to be ready for a push to new 52-week highs.

Above this week’s high and the 61.8% retracement is in play up near $35.

If the 10-day and 21-day moving averages don’t act as support, look for the 50-day moving average - which was strong support on March 25 - and the 38.2% retracement to offer a potential buying opportunity on the dip.