The stock has been below a death cross since March 17, and Monday morning’s open was below its 50-day simple moving average at $84.97.
The hotel chain also owns the Ritz-Carlton and St. Regis luxury brands.
All locations have been hit hard as Americans stay home on lockdown due to Covid-19. Here is TheStreet's report on Marriott's earnings.
The stock opened Monday at $84.30 down 44.3% year to date and in bear market territory 45% below its 52-week high of $153.39 set on December 27.
The stock is also in bull market territory 81.1% above its March 18 low of $46.56.
Extreme volatility has been the backdrop for stocks throughout 2020. This is why you need to look at the daily and weekly charts and to be aware of the value levels and risky levels.
The stock is reasonably prices with a p/e multiple of 14.50 with a dividend yield of 2.20%.
The Daily Chart for Marriott
Courtesy of Refinitiv XENITH
Marriott has been below a death cross since March 17 when the 50-day simple moving average fell below the 200-day simple moving average to indicate that lower prices lie ahead.
The stock gapped lower on February 24 then plunged below its 200-day simple moving average on February 25. This led to the March 18 low of $46.56.
The initial rebound was to $96.00 on March 26. This was followed by a quick dip to $57.00 on April 3. The next wave up peaked at $97.45 on April 29.
Since then the stock declined tracking the 50-day SMA downward and now at $84.96.
The Weekly Chart for Marriott
Caurtesy of Refinitiv XENITH
The weekly chart for Marriott is neutral with the stock below its five-week modified moving average of $87.61.
The stock is well below its 200-week simple moving average or reversion to the mean at $114.08.
Its been below this average since the week of March 6.
The 12x3x3 weekly slow stochastic reading is projected to rise to 34.68 this week up from 32.72 on May 8.
At the December 27 high this reading was above 90.00 which put the stock in an inflating parabolic bubble and bubbles always pop.
Trading Strategy: Buy Marriott on weakness to its weekly value level at $63.92 and reduce holdings on strength to the quarterly and monthly risky levels at $99.13 and $110.26, respectively.
How to use my value levels and risky levels:
The closes on Dec. 31, 2019 were inputs to my proprietary analytics. Semiannual and annual levels remain on the charts. Each uses the last nine closes in these time horizons.
Second quarter 2020 levels were set established based upon the March 31 closes. The monthly level for May was based upon the close on April 30.
New weekly levels are calculated after the end of each week.
New quarterly levels occur at the end of each quarter. Semiannual levels are updated at mid-year. Annual levels are in play all year long.
My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in.
To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.
How to use 12x3x3 Weekly Slow Stochastic Readings:
My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.
The stochastic reading covers the last 12 weeks of highs, lows and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading and I found that the slow reading worked the best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered overbought and readings below 20.00 considered oversold.
A reading above 90.00 is considered an “inflating parabolic bubble” formation that is typically followed by a decline of 10% to 20% over the next three to five months.
A reading below 10.00 is considered as being “too cheap to ignore” which typically is followed by gains of 10% to 20% over the next three to five months.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.