Choosing Which Cruise to Take

As winter approaches it is a ritual, especially for those in the New York Metropolitan area, to plan your cruise for the January or February timeframe. Carnival Corporation, $CCL, and Royal Caribbean Cruises, $RCL, both offer great alternatives, so how do you choose? Well one way is to compare the stock charts. I hear you laughing but consider this for a minute. Does the stock price and the trajectory of one stock in a sector as measured against another offer any value in this decision? What drives a company’s stock higher and another lower? Profits are one thing but what about bookings? Maybe this is not so silly. So let’s look at the ratio chart of the price of Carnival Corporation against that of Royal Caribbean Cruises to see what we can learn.

The chart above shows that $CCL is a clear winner over $RCL for the last 8 months. From October to late November that trend reversed lower but has now started to move back in favor of $CCL again. It broke above resistance at 1.25 last week and started moving higher. There is resistance at 1.33 and the 1.47 higher. Support comes at 1.175 and 1.15 below 1.25. The Relative Strength Index (RSI) is trending and moving sharply higher and the Moving Average Convergence Divergence (MACD) indicator is positive and increasing. Friday the ratio touched resistance at 1.33 and pulled back slightly, creating a trading opportunity.

Long Trade: Buy 3 $CCL and sell short 4 $RCL on a move in the ratio over 1.34 with a stop at 1.32

Short Trade Idea: Sell 3 $CCL and buy 4 $RCL on a move below 1.31 with a stop at 1.325

If you want to know how I would trade this names or for more ideas and deeper analysis, use the Get Premium button above. As always you can see details of individual charts and more on my StockTwits feed and on chartly.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog