Carnival Corp (CCL) pushes forward
In last week's edition, 'I'm not leaving!' we talked about the Travel & Leisure industry, specifically relating to Cruise giant Carnival Corp (CCL) and their resuming of certain cruises as of Dec 5th.
As expected, the bullish momentum has continued, with the price currently sat at c$24. Our prediction was and remains to see a slight further move up to between $25-28. Once our wave three targets are hit, we will then await a pullback before looking to get long again.
Airline stocks take off!
The foremost opportunity on most investor's minds is the reopening play. With the recent positive vaccine news that indicates the global economy may soon be fully reopened, the focus is on how to take advantage of the reopening. We wanted to dig into another sector within the travel industry, airline stocks.
Airlines had a difficult time this year, with lockdowns and global travel coming to a halt as 'normal' life was put on hold. This sector is where a lot of eager eyes were as the first national lockdowns lifted. A new breed of day traders emerged during this period as we saw unseen amounts of retail capital flood the markets through the app Robinhood.
There was a lot of criticism on value stock plays around this time. Even legend, Warren Buffet, declared all airline stocks had been removed from Berkshire Hathaway's holding.
The new breed of Robinhood Millenial day traders did not care. Their trades were based on the simple logic that when lockdowns were lifted, national economies reopened, then airline stocks would fly back up to normal previously seen levels. An ETF, ticker JETS, that's top holdings are the four major US airlines, saw a vast flow of capital. It previously held $33 million in early March and by mid-June soared past $1 billion when we saw price take off and go on a +95% flight.
The technicals paint a strong bullish picture, having had breakouts and fresh highs printed on weekly and daily timeframes. There still appears to be much more potential upside for this wave three continuation; however, if we saw a pullback from the current price, we would be presented with some strong setups around the $21 region.
There is zero doubt the technicals are painting a positive picture, and the expectation is that due to the positive vaccine news 'normaility' is back in site. Fundamentally in the short term, we agree, but the question is, for how long will the bullish momentum continue? Data will look great for the next couple of quarters, as it's been terrible in the last three.
As more data comes out, we will see the pandemic's longer-term implications and the real damage it has caused. Will employees still fly internationally for meetings and conferences? Has general consumer habits changed from a year ago? As flight schedules return to normal, will airlines see the demand to fill flights to full capacity?
Despite the positive outlook, when we look at the chart below that shows the daily number of passengers screened at TSA checkpoints in the USA, we can see we are not near previous levels, and these stats don't appear to be strongly increasing.
What else are we watching?
There is so much to cover that we simply can't fit it all in this newsletter. Irek covered all markets in full in the latest Insights episode, 'End of Year Prep', but here are some cliff notes.
- BTC: New all-time highs were achieved, and we had a scarily significant-close for November's monthly candle, which we covered last week. Despite the deceleration on the daily, there's still a massive amount of bullish pressure present.
- USD: We broke the significant support level on the daily chart of the FXCM USDollar Index that we spoke of last week and closed out the week extremely bearish. November monthly candle also closed bearish, and therefore we can expect to see a decline of the USD as we move into 2021.
- Equities: Many sectors and main indexes are in new territory, forming all-time highs off the back of the positive vaccine news. How long will this bullish momentum continue before the real economic data is priced in and we see the real impact of the last year? Be alert for a sharp drop from these new heights.
TMC Club - Do you even holy grail?
As traders, investors, we all dream of catching a holy grail trade. A holy grail is where the bias on all time frames, Monthly/Weekly/Daily all align swiftly followed by the intraday charts offering several opportunities to enter and scale into the position.
Charlie, who joined us at the start of this year, caught his first Holy Grail set up (learn about Holy Grails here) and banked a godly amount of profit this week! He held the trades from the Nov 23rd and finally took a whopping +22.4% profit from the markets when he closed it down on Dec 3rd.
Trade of the year award, anyone? Charlie shared his epic trade in the TMC Club. Check it out below:
BEFORE YOU GO!
You wouldn't be reading this if you didn't want access to our full insights, weekly live events, epic TMC Club. Do us all a favour and follow this link, where we are still running our Special Holiday Offer.
Don't sleep on it.
What's happening this week?
Monday, December 7, 2020 @ 1pm PT
Market Update - lead by Jonny Godfrey
Wednesday, December 9, 2020 @ 1pm PT
Market Update - lead by Jonny Godfrey
Thursday, December 10, 2020 @ 1pm PT
Coaching Call - lead by Irek Piekarski
*TMC Diamond access required
All the best for the week ahead and we'll see you in the club!
Jonny Godfrey & the TMC Team