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Carnival Stock Has Cruised Lower. Is Now the Time to Buy?

Carnival stock has been under pressure for weeks. The charts are finally showing some positive signs.

It has not been an easy run for Carnival Cruise  (CCL) - Get Report. The Miami cruise operator's shares are down about 2% on Thursday, but that’s much better than the 5.2% loss the stock was sporting at the recent low.

This one has caught a lot of investors off guard, even though it played almost perfectly into the “sell the news” setup.

If Carnival closes lower on the day, it will mark the stock’s fourth straight daily decline. The shares are down 8.6% so far this week, and Carnival is likely to register its fifth straight weekly decline.

With plans to begin sailing this month, cruise stocks have been in focus. But so have other travel-related stocks as the U.S. continues to open up.

Delta Air Lines  (DAL) - Get Report, American Airlines  (AAL) - Get Report, Caesars Entertainment  (CZR) - Get Report, Boeing  (BA) - Get Report and others have all declined despite the reopening momentum.

That’s the “sell the news” reaction.

Carnival fell in late June when it said it planned to raise another $500 million. It fell again when it reduced its debt a few days later. Investors can't win. 

Obviously sentiment is not good. Will that change?

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Trading Carnival Cruise Stock

Daily chart of Carnival stock.

Daily chart of Carnival stock.

Carnival stock has had an interesting tendency to trade between its key retracement levels.

Most recently, the 38.2% retracement has been support after serving as resistance. Resistance shifted to the 50% retracement once the stock pushed through the $24 area.

While Carnival did trade up through the 50% retracement, it quickly fell back below this measure.

On Wednesday, Carnival closed below the 38.2% retracement, then gapped down on Thursday. However, the gap-down action put the shares right into the 200-day moving average.

We’re now seeing a bit of divergence on the Williams %R reading, too, as the stock dips into this key moving average.

Aggressive bulls can look for a bounce from current levels and hopefully the bounce will send the stock back above the 38.2% retracement. 

Above that measure puts the 10-day moving average in play, followed by the 50-day moving average. 

Below Thursday’s low and Carnival stock will be vulnerable to more downside.