Carnival Is Having Problems Navigating the Decline

Buyers of the cruise line's shares should think about waiting for a bottom to form.

Carnival Corp. (CCL) has yet to find a safe port (read support) on the charts. CCL was downgraded to a hold recommendation by TheStreet's Quant Ratings service Tuesday, but the charts look weaker than that to me.

Let's check out the charts and maybe leave our luggage at home for now.

In the daily bar chart of CCL, below, we can see that prices have been in decline the past 12 months and in a more serious decline since the middle of January. Prices are below the declining 50-day moving average line and the declining 200-day moving average line.

Trading volume has been heavier since the middle of December telling us that traders and investors are voting with their feet. The daily On-Balance-Volume (OBV) line has fallen to a new low for the move down indicating that sellers of CCL have been more aggressive.

The 12-day price momentum study in the lower panel is not showing us a bullish divergence as the decline has not slowed.

 

In the long-term weekly bar chart of CCL, below, we needed to go back 10 years to see where prices might fall to. Prices have not been down in this area since 2014 and going this far back in history may mean the chart support is more psychological than real. CCL is below the declining 40-week moving average line.

 

The OBV line and the MACD oscillator are both weak.  

 

 

 

In this weekly Point and Figure chart of CCL, below, we can see a potential downside price target in the $32 area.  

 

 

Bottom-line strategy: Trip insurance buyers should read the fine print carefully these days...and buyers of CCL should think about waiting for a bottom to form before going long.

 

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