It is too bad the actual boat from the TV series "The Love Boat" was scrapped not too long ago. By today's standards, it was on the small side and lacked glitz. But no matter what happened on or off shore, everything was fine by the end of the show. Shares of Carnival Corp. (CCL) and Royal Caribbean Cruises (RCL) could use some Hollywood script writing right now.
Shares of Royal Caribbean plunged sharply today due to weak guidance. However, prices have been sinking since the beginning of the year (see the chart above). Let's look back at the high in October/November. Prices pulled back and then make a slightly higher high by the end of December -- then the waves hit. At the beginning of the January, RCL gapped lower and then closed below the 50-day moving average. There was a rebound rally to the underside of the 50-day average but that failed, too. Prices continued to sink to close below the 200-day average. A subsequent rally to the underside of that average also failed. The On-Balance-Volume (OBV) line turned down at the beginning of the year, as did the Moving Average Convergence/Divergence Oscillator.
The price action for CCL (chart above) shows a similar pattern as RCL. Though prices broke below the 50-day average, there was no rebound rally until CCL broke its 200-day moving average.
Both CCL and RCL are likely to sink further. Travel warnings and fears related to the Zika virus haven't peaked yet, in my opinion. Heavy volume on this decline is a sign that investors are throwing in the towel, but $65 and the $42 area are "measured move" targets for RCL and CCL, respectively, so they have room to fall further.