Carnival Holds Up on Earnings but Here’s What Traders Need to See

Carnival delivers a subpar preliminary earnings result but the stock is handling the news pretty well. Let's look at the chart.
Author:
Publish date:

Carnival Cruise  (CCL) - Get Report was down about 1.5% on Monday after the cruise company reported preliminary earnings.

Carnival, which usually reports in late December, gave investors a business update a bit later than usual this year.

Carnival expects a quarterly net loss of $2.2 billion and an adjusted net loss of $1.9 billion. Analysts were expecting a loss of $1.6 billion. 

On the bright side, it has more than $9 billion in cash and equivalents. Further, demand looks strong once Carnival actually resumes its operations.

The stock has been holding up pretty well, considering that the business hasn't really been operating after another extension of sailing halt earlier this month. 

Trading Carnival

Daily chart of Carnival Cruise stock.

Daily chart of Carnival Cruise stock.

Carnival has been an interesting trade because it continues to hold well above the lows despite its lack of revenue. Perhaps that’s bulls’ way of getting ready for the “reopening America” trade.

Even after this worse-than-expected announcement, shares continue clinging to the recent support area near $20 and the 10-week moving average.

While Carnival is technically OK as long as it holds these levels, bulls need to see something more. They need to see rotation.

Downtrend resistance (blue line) continues to keep a lid on the stock price. A weekly-up rotation over the prior week’s high would be a good start, but on an even shorter timeframe, bulls may consider a daily-up rotation too.

Ultimately, we are looking for Carnival to catch some bullish momentum and retest the 38.2% retracement near $24.60. This level has been major resistance twice since the coronavirus selloff.

The only way to get there is to start rotating over prior levels and clearing downtrend resistance.

Should Carnival stock lose the $20 level and 50-day moving average, then a move down to $18.25 could be in play.

That really wouldn’t be all that unhealthy, even though it’s not what bulls want to hear. It would fill the most recent gap from November, while putting the 50-week moving average and 23.6% retracement in play.