carnival society CCA and Royal Caribbean Cruises, Ltd. RLC hit new 52-week lows on Thursday after plunging 13% and 10% respectively on Wednesday in response to a series of analysts weighing on stocks.
Morgan Stanley analyst Jamie Rollo maintained an underweight in Carnival and lowered the price target from $13 to $7. Barclays Analyst Brandt Montour initiated a hedge on the stock with an overweight rating and announced a price target of $14.
Montour also weighed in on Royal Caribbean, initiating coverage with an overweight rating and announcing a price target of $56.
Montour’s new price targets for Carnival and Royal Caribbean suggest an increase of around 60%, each, over the current share price.
Despite their most recent dip, Carnival and Royal Caribbean both look set to rebound over the next few days, due to bullish signals that have appeared on their daily charts. Carnival looks slightly stronger than Royal Caribbean due to the high level of bullish divergence that has developed on its chart.
It should be noted that events affecting the markets in general, negative or positive reactions to earnings releases and headlines, can quickly invalidate patterns and breakouts. As the saying goes, “the trend is your friend until it’s not” and any trader in a position should have a clear stop in place and manage their risk versus their reward.
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Carnival card: Carnival fell to a level on Thursday that the stock has not traded since April 3, 2020.
Despite the sharp decline, Carnival’s Relative Strength Index (RSI) has recorded a series of higher lows since June 16, indicating that the bullish momentum is building. For the bullish divergence to correct, the stock will either need to trade significantly higher in the near future or drop low enough to push the RSI back into oversold territory.
Carnival appears to be printing a long-legged doji or hammer candlestick, which could indicate higher prices are set for Friday. The stock is trading in a confirmed downtrend and any bounce is likely to form another lower high.
Carnival has resistance above at $9.16 and $10 and support below at $8.53 and $7.80.
The Royal Caribbean chart: Like Carnival, Royal Caribbean has also formed a bullish divergence on its chart, but since Royal Caribbean’s stock price hasn’t fallen as deeply as Carnival’s, the divergence isn’t as strong. Regardless of, the title seems to have to rebound in the next few days in order to correct the divergence.
Much like Carnival, Royal Caribbean was trying to print a long-legged doji or hammerhead candlestick on Thursday, suggesting higher prices are in store for Friday.
Royal Caribbean has resistance above $40.35 and $47.42 and support below $33.50 and $25.60.
See also: Could Carnival Stock go to zero? Why Pete Najarian sees choppy waters on the horizon