We are monitoring the group closely, as travel and leisure stocks are sensitive to geopolitical tensions and rising oil prices. Major cruise line stocks are in major support and it’s worth keeping an eye on the breakdown in the coming weeks. We track the broader theme of travel and leisure through our ETF distributor, PEJ, the Invesco Leisure Entertainment ETF. PEJ is showing signs of long-term upside depletion using the Demark indicator, suggesting the correction could last for much of this year. The last signal of this kind was in 2018, marking the top of the business cycle. This signal reinforces the overbought situation from the monthly stochastics, and the monthly moving average convergence divergence (MACD) indicator is in a pinch, reflecting weakening long-term momentum in travel and leisure stocks. RCL, the largest cruise company by market capitalization, is testing cloud support weekly at around $265. If RCL decisively breaks through this level, it will reverse the cyclical uptrend in a secular bearish development. Additionally, RCL’s weekly MACD turned negative last week, increasing the risk of failure despite stabilizing oversold conditions in the short term. The confirmed breakdown will target the 50% Fibonacci retracement level around $199. CCL tested cloud support and established a proving ground last week just below $24. Similar to RCL, it appears to be at risk of a breakdown completing a bearish double top formation. Medium-term momentum is negative and should overwhelm the oversold situation following the current pullback. Secondary support for CCL is near $20. Fortunately for cruise line stock holders, the daily chart suggests that today’s bailout rally could persist for a week or two, allowing for a better exit. The CCL daily chart is in an oversold uptrend, and the daily MACD is on the verge of a “buy” signal, supporting a short-term relief rally. The cloud model and the 200-day moving average (MA) near $28.80 provide initial resistance. RCL also has some initial resistance at its 200-day moving average near $304. The same setup applies to the broader travel and leisure group, so given the deterioration in the charts, we would view short-term strength as an opportunity to reduce exposure. —Katie Stockton with Will Tamplin Get free access to Fairlead Strategies research here. Disclosure: None. All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer. Fairlead Strategies Disclaimer: This communication has been prepared by Fairlead Strategies LLC (“Fairlead Strategies”) for informational purposes only. This material is for illustrative and discussion purposes only and is not intended to be, and should not be construed as, financial, legal, tax, or investment advice. You should consult an appropriate advisor regarding such matters. This material reflects the author’s current expectations and presents information up to the date indicated and may be revised by the author, but he is under no obligation to do so. This material may include commentary on a wide range of indices, market conditions, different types of securities, and cryptocurrencies using the field of technical analysis that evaluates supply and demand based on market prices. The views expressed here are solely those of the author. This material should not be construed as a recommendation, advice, offer or solicitation to buy or sell any investment. This information is not intended to provide a basis for making an investment decision in any particular security or its issuer. This document is intended for CNBC Pro subscribers only and is not for general distribution. Certain information is provided by and/or based on third party sources and while such information is believed to be reliable, no representation is made as to the accuracy, completeness or timeliness of such information. This information is subject to change without notice. Fairlead Strategies undertakes no obligation to maintain or update this material based on subsequent information or events, to provide additional or supplementary information, or to provide updates or corrections to the information contained herein. Fairlead Strategies, its officers, employees, affiliates and partners shall not be liable in any way to any person for any loss, expense or claim arising from reliance on this material. Nothing contained in this document is, and should not be relied upon, as a promise or representation as to future performance. Past performance is not indicative of future results. The opinions expressed in this material may be different from or contrary to those expressed or actions taken by Fairlead Strategies or its affiliates, or their respective officers, directors or employees. Further, the opinions and assumptions expressed herein are made as of the date of this notice and are subject to change and/or withdrawal without notice. Fairlead Strategies or its affiliates may have positions in the financial instruments mentioned, may have acquired such positions at prices that are no longer available, and may have interests different from or contrary to your interests or inconsistent with the advice given herein. Investments made are made on the same terms as unaffiliated investors and do not constitute a controlling interest. Fairlead Strategies, its officers, employees, affiliates, or partners assume no liability for any loss that may arise from the use of the information contained herein. The financial instruments mentioned herein are speculative in nature and may involve risks to principal and interest. Prices and levels shown are historical or purely indicative. This material does not take into account the specific investment objectives or financial situation, or the objectives or needs of any particular investor, and is not a recommendation of any particular security, investment product, or other financial product or strategy for any particular client. The securities, investment products, and other financial products or strategies discussed herein may not be suitable for all investors. Recipients of this information must make their own independent decisions regarding the securities, investments, or other financial products mentioned herein. The Materials should not be provided to any person in any jurisdiction where such provision or use would be contrary to local laws, rules or regulations. This material may not be reproduced or redistributed without the written consent of Fairlead Strategies.
