Here’s how I’m trading the vacation stocks! Check $RCL $CCL $NCLH and $HA (April 29, 2020)
NCLH
I want to look at the cruise ships here and this is why: They are even moving after hours; I bought some Carnival Cruise Lines ( NYSE: CCL ) after the close, and some more Norwegian Cruise ( NYSE: NCLH ), and more Royal Caribbean Cruise ( NYSE: RCL ) and this is why: Because we got some really nice trades on these going.
I have been talking about these for a while; I think I have talked about them in the Free Chart of the Day, we have been in these things for a while, trading them around a little bit. But for the most part, biding our time; you see these lines here that I have drawn, I call this a pinch and pop.
The range on this little W pattern, you can call it an M pattern if you are looking at it that way, whatever it is. But the lows get higher, the highs get lower and it’s like the stock just kind of pinches into this volatility compression pattern or a volatility squeeze and then finally squirts out the upside, which is what we got here on RCL ( NYSE: RCL ) when it hit 40.00. Then now, just 2-days later, it’s up at $52.00. That’s not $12.00 that’s 32 percent this is a monster move.
And then you can see the same thing in Carnival Cruise ( NYSE: CCL ). My target for this is $20.00. Why? Because it just seems kind of like a good number, Seriously, that’s it, nothing on valuation it’s really just based on the numerical system, $20.00 is a round even number. The 50-day moving average is basically at $19.00 so that could give us some resistance, it actually has on Norwegian Cruise ( NYSE: NCLH ), it’s up at the 50. But look at the way these things are trading after hours. My bet is that tomorrow morning they are going to be going up, they are going to be up even more just because that is just kind of the way these things trade.
To be perfectly honest with you, I don’t know if all of these are going up after hours. I haven’t seen any real news on them like on briefing.com, which generally has some pretty good stuff. So there is probably something going on somewhere but at this point in my trading career I don’t really care. I don’t trade the news I trade the stock. It’s nice to know why a stock might be perking up like this but when it gets right down to it you really just want to trade the market’s reaction to the stock as opposed to the stock itself.
I think all of these cruises work; if you are buying them tomorrow you are chasing them, there is no question about it. But if you are in these stocks, and hopefully you are because I have been pounding the table on them for a while; then I would suggest protecting them. You should definitely not be taking a loss on these stocks. Your stops should absolutely be at the lowest, lowest, lowest point. They should be at break-even, that’s the lowest. But you should be using intraday price action, I use this format, I can switch these all around. This is the 5-minute chart, this is a 15-minute chart, this is the 30-minute chart, and then this is the day chart with a key moving average so that I kind of keep a reference as far as where I am.
When I am looking at these types of kind of short-term order flow, ebb and flow trades, I want to see all these different time frames; because if I am just locked into one time frame; can you imagine if you are just looking at a 1-minute time frame? That would be it for me, oh, it’s a bearish engulfing pattern and I’m out of here. And then, okay, I am going to buy this breakout and then 3-minutes later, oh, I have got to sell, it’s ridiculous. And so if you look at multiple frames what you are going to wind up finding is that you are able to stay in a trade longer. At least that is what I have found.
When I have a better frame of reference on what the stock is doing across time frames then I have more of an ability to just sit with a stock that is trending even though on a very short-term time frame like a 1-minute or a 5-minute chart and you can expand this to whatever time frames you are looking at. But I am able to hold through these pullbacks in the shorter duration charts BECAUSE I can keep a good frame of reference for what the stock is doing. And also then, it helps me visualize what the underlying dynamics of a trade are. Listen to me on this, the reason a stock like this is moving up, 61 million shares today, this is not Billy Bob, and Jethro buying stock, these are institutions coming into these stocks. They are not just going to keep buying them all the way up.
This type of a move is absolutely 100 percent certain to be because of institutional buying. Institutions don’t day trade, at least the reputable ones don’t. Institutions don’t day trade they accumulate positions but they are not just going to keep buying and buying and buying. But if you have this in your mind, that yes, I know institutions are accumulating positions. This is a stock they are absolutely accumulating. With that in mind, and you know they don’t change their mind between 9:45 and 10:00, if they’re buying they’re buying. If they are selling they are selling, but they are not buying all day long. And so with that as a known quantity, like you see here early this morning the stock runs up and then it drifts back down but then it stops.
Okay, so the stock popped up but then it held the gap and it started moving higher. This is a perfect 59-minute trade type of thing. So a little after 10:00 the stock is up at a new high for the day and your conclusion is, institutions are buying, that’s your conclusion, institutions are buying. And so then the stock runs up and you are on the right side of the move. And then the stock, at 11:00 it promptly turns around and drifts back. And you say, “Oh, I have got to sell the stock.” Well no. Why would you do that? Institutions are buying they are just not buying right here. Instead, the stock is drifting sideways, and then once again institutions are buying. But then the stock pulled back here, institutions must have been selling. Probably not they just weren’t buying.
The point is, once you get the drift of what the ebb and flow is in a stock on any given day then you just have to stick with that trend. It can be a little bit different if we are looking at blow-off tops, like a stock that is hitting all-time highs every day and it just goes parabolic. But this is really not that; this isn’t that kind of move.
I just thought I would mention that. You want to be trading these recreation stocks. I don’t care if it is Priceline or booking.com or no matter what it is, this is where money is coming into in these. Hawaiian Air ( NASDAQ: HA ) is another biggie.
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