In his first "Executive Decision" segment of Mad Money Wednesday night, Jim Cramer spoke with Steve Weisz, president and CEO of Marriott Vacations Worldwide (VAC) , the timeshare vacation provider.
Weisz said Marriott's typical timeshare owner has higher incomes and higher net worth, and has been less affected by the pandemic.
Timeshare owners put a lot of value on their vacations, Weisz continued, and that's why 60% of their sales have been to existing owners looking for more options.
Weisz said they predicted the recovery would progress slowly, starting with short drives, followed by long drives, short flights and longer flights. These predictions have so far proven to be accurate.
Let's check out the charts of VAC before we plan our next vacation.
In this daily bar chart of VAC, below, we can see that prices were sharply cut down in size from February to March. VAC did rebound from the mid-March low but ran into resistance around the flat to declining 200-day moving average line.
Trading volume has been heavier than "average" since late February and the On-Balance-Volume (OBV) line shows some interesting movement. The OBV line did not decline much in February and March and it has since moved up to a new high. I find this interesting in that it would suggest that investors did not liquidate (sell) much on the decline and now the price action and the OBV line have been diverging bearishly with the OBV line at a new high but prices are disappointing.
The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in April for a buy signal but it has recently crossed to the downside for a take profits sell signal.
In this weekly bar chart of VAC, below, we went back five years to gain some perspective on the decline this year. Prices have been under selling pressure since early 2018 and this year's decline broke the 2016 low. The 40-week moving average line is trying to bottom but we also see prices having trouble with gains above this indicator. The weekly OBV line shows a little improvement the past three months but not enough to tell us that aggressive buying of VAC has really returned. The MACD oscillator just crossed to the upside for a cover shorts buy signal similar to the late 2018 decline.
In this first Point and Figure chart of VAC, below, we used daily price data to construct the X's and O's. Here the chart is indicating a potential downside price target in the $77-$76 area. This area or zone should provide some support.
In this second Point and Figure chart of VAC, below, we used weekly price data to construct the chart. Here we see that the software has calculated a potential longer-term price target of $194 which would be a record high if reached.
Bottom line strategy: In full disclosure, my wife and I have been members of "the vacation club" for a number of years. The charts of VAC are mixed. The short-term looks risky with a pullback to the $77 area looking likely, while the longer-term out will depend on whether a base pattern can be made in the months ahead.
