A Tale of Two Cities…er, Hotels
- Posted by Greg Harmon
- on November 20th, 2013
Hotel stocks have a reputation that proceeds them. Marriott ($MAR) always runs up into earnings and then pulls back as the first one to report. Some smaller names then follow or never pullback. Two of those, Starwood Hotels & Resorts, $HOT, and Hyatt, $H, have charts that are ready to do something. The question is what? Well either way you can be prepared. Start with Hyatt.
The chart shows a break of a channel higher and then the current consolidation in an ascending triangle. A bounce off of the bottom rising support and move higher would be interesting to a continuation of the move higher, with a target of 50.50 and then 55 eventually. The larger target triggers on a move over the top resistance at 49.40. But a move below that rising resistance would look for a pullback to the previous channel below. Which will it be? The RSI making a lower low suggests a continuation lower but a reversal in it would create a RSI Positive Reversal with a target at 50.50. The MACD is rolling lower and also suggests a move lower in price. Nothing to do but wait and watch for which one the stock gives you.
In Starwood, above, a similar situation is in place. After breaking above the ascending triangle it is consolidating between 73 and 75.50, about halfway to the target of 80. A break of the consolidation higher would likely take it there or higher. But a break below the consolidation is also likely to target a retest of the initial breakout area at 70 as there is little price history and no support before that. The RSI in this case is also pointing lower as is the MACD. But a reversal higher tomorrow would create a RSI positive reversal in this name as well with a target of 76.10. The added indicator of the Bollinger bands shows that with them getting very tight a move is due very soon. Which way? Again, you just need to sit and wait and see. But now you are ready!
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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