TRAVEL STOCKS UNDER PRESSURE AGAIN -- AIRLINES, GAMBLING STOCKS, AND CRUISE LINERS RETEST MOVING AVERAGE LINES -- PLAYING SOME DEFENSE GOING INTO WEEKEND
TRAVEL STOCKS UNDER PRESSURE... My Tuesday message showed a number of travel and tourism stock groups with heavy exposure to China finding support near moving average lines; or regaining them. Today's message shows those same groups under pressure again today. Let's start with airlines. Chart 1 shows the Dow Jones Airlines Index retesting its 200-day moving average today. Chart 2 shows United Airlines (UAL) still remaining well below that red line. UAL has heavier exposure to China than other U.S. airlines. Chart 3 shows American Airlines (AAL) backing off from its 200-day line. Delta (DAL), however, remains above its red support line.
WYNN RESORTS LEADS GAMING STOCKS LOWER... Gambling stocks are also among today's weakest groups. Chart 4 shows the Dow Jones US Gambling Index in danger of falling back below its 50-day average. Wynn Resorts (WYNN) is leading it lower. Chart 5 shows WYNN in danger of retesting its 200-day line. Las Vegas Sands (LVS) and MGM Resorts (MGM) are trying to hold their 50-day lines. Cruise lines are under even more pressure.
NORWEGIAN CRUISE LINE SLIPS BELOW 200-DAY LINE...Tuesday's message showed Norwegian Cruise Line Holdings (NCLH) trying to stabilize at its 200-day average in a sign that cruise liners might also be finding a bottom. Today's last chart, however, shows it falling below that support line as cruise liners are being sold heavily today. Carnival (CCL) and Royal Caribbean (RCL) have remained below their red lines.
CORONAVIRUS STILL A THREAT?... Judging from this week's strong rebound in global stock markets, it seemed like concerns about the coronavirus had receded into the background. Today's selling in travel and tourism stocks, however, suggests that may not be the case. How those stocks with the heaviest exposure to the Chinese virus end the week may help determine whether the market is out of danger. Investors are turning a bit more defensive just in case.
PLAYING DEFENSE GOING INTO WEEKEND... Today's drop in bond yields shows that investors are buying bonds as a defensive hedge going into the weekend. Investors are also favoring bond proxies like staples and utilities, while selling energy and materials stocks. Copper producers are down with the industrial metal. A stronger dollar may also be weighing on commodity-related assets. Although gold is experiencing a minor bounce, gold miners are being sold. That's normally not a good sign for the yellow metal when its miners are weakening.
