Shares of Carnival Cruise Line are trading almost 6% higher on Wednesday ahead of the company's earnings report Friday.
The stock single day surge takes it above its 200-day moving average for the first time since March 7th. The previous break below that long-term moving average saw the stock drop an additional 12% in two days as selling volume intensified.
Shares of the cruise line operator are trading more than 35% lower since their February highs. Investors have been transitioning away from consumer discretionary stocks on fears related to the economy, tariffs and a possible return of inflation.
Last quarter, Carnival Cruise Lines reported an increase in revenue of 10% compared to the same quarter last year. That report saw a beat of both the company’s earnings per share and revenue targets.
Investors will be eyeing the company's outlook during Friday's report as forecasts for consumer spending continue to wane.
For now, Wednesday's rally should be considered a “buy the rumor” rally ahead of CCL’s earnings report. This puts pressure on the company’s results and outlook as short-term traders will quickly shift their sentiment on the stock leading to further declines.
From a technical perspective, the answer is no.
Carnival Cruise Lines 50 day moving average to turn bearish in mid-February. Since then, the stock declined by an additional 20% as the trend has become unfriendly for investors.
From a longer-term perspective, Carnival's March lows breached the stock’s 20-month moving average. That trendline represents the line of demarcation between a long-term bull and bear market trend.
A poor showing on the company's earnings report will propel the stock below that 20-month moving average And Target further declines to a price of $15.
