Norwegian Postpones Cruise Date - Should Cruise Stocks Be Sold?

Carnival, Royal Caribbean and Norwegian Cruise Line are all under pressure after Norwegian extends its suspension for cruising until Sept. 30.
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Cruise stocks were under pressure on Wednesday after Norwegian Cruise Line  (NCLH) - Get Report extended its cruise suspension until at least Sept. 30.

That announcement also was weighing on Carnival  (CCL) - Get Report and Royal Caribbean  (RCL) - Get Report as investors try to balance these stocks after a strong run from the recent lows.

When the coronavirus was sweeping through the U.S. and forcing many states into lockdown, cruise operators were forced to dock their ships. The risk of cruising was simply too high and customers did not want to get stranded at sea with nowhere to port.

As restrictions eased and as these companies raised new capital though, the stocks have been bouncing back. Let’s look at the charts.

Trading Cruise Stocks

Daily chart of Norwegian Cruise stock.

Daily chart of Norwegian Cruise stock. 

Let’s start with Norwegian Cruise, given that it was the one that announced the news weighing on the group today.

Shares were rejected by the 38.2% retracement once shares all but filled the March gap near $27.50. However, $17.50 and the 20-day moving average continue to act as support.

As long as that’s the case, the setup for Norwegian stock favors the bulls and a potential retest of $27.50. Below $17.50 and the 50-day moving average is on the table.

Daily chart of Carnival stock.

Daily chart of Carnival stock. 

We have a similar setup with Carnival Cruise, with the 20-day moving average and the 23.6% retracement acting as support. Should these levels fail to support Carnival, it puts the $15 level and 50-day moving average in play.

Unlike Norwegian stock, Carnival failed to fill the March gap. Although, it did rally up to $25 resistance and the 38.2% retracement.

Let’s see if CCL stock can continue holding its 20-day moving average. A rotation over this week’s high at $21.85 — which is also near the 20-week moving average at $22.15 — puts $25 back in play. 

Above that and bulls may see a gap-fill up toward $27.

Daily chart of Royal Caribbean stock.

Daily chart of Royal Caribbean stock. 

Up more than 200% from its lows, Royal Caribbean has had the strongest rebound of the group, besting Norwegian’s 100% rally and Carnival’s 125% gain off the lows. Although still down 56% from this year’s highs, Royal Caribbean stock is outperforming its peers on this measure as well.

Shares are currently riding the 20-day moving average higher. Should it continue to do so, look for a rotation back over this week's high at $66.89. Above puts the $75 to $80 area in play, followed by the 200-day moving average.

On a break of support, I would love to see a dip down to the 50-day moving average and uptrend support (blue line), giving traders a solid risk/reward entry point.