Booking is stock to short, technical analyst says

Travel stocks head into the new week on two different tracks.

Cruise line stocks ended last week under pressure after a White House meeting with cruise CEOs was postponed following President Donald Trump’s positive Covid test.

Airline stocks ended higher after House Speaker Nancy Pelosi signaled additional government assistance for the beaten-down industry.

Craig Johnson, chief market technician at Piper Sandler, told CNBC on Friday that one travel stock could signal downside for the sector.

“We’ll take a look at the chart of Booking, ticker BKNG. This is a stock here that looks to us like we violated the uptrend support line. And it looks like to us that this little relief rally we got right now would be a great opportunity to be shorting,” Johnson said on “Trading Nation.”

Shorting sellers take a position betting that the price of the stock will fall. Booking has nearly 3% short interest as a percentage of its float.

The fundamentals also suggest Booking could face several headwinds, Johnson said.  

“The TSA numbers are down about 60% year over year, so we’re not seeing a lot of activity at the airports,” he said. “And secondarily, when you go back and you just look at how long it might take for these bookings to recover to 2019 levels, it could be until 2024. So not only do the technicals look weak but the fundamentals seem challenged too. So this is a stock I’d be looking to short.”

Danielle Shay, director of options at Simpler Trading, said she is not ready to back the travel stocks, particularly the cruise lines, even after their strong rebound off lows set earlier this year.

“Everything with the cruise lines is so up in the air and when these things actually start traveling again, who knows which ports are going to remain open and they are surely to become floating petri dishes,” Shay said during the same “Trading Nation” segment. “The only way to trade them is to the downside.”

Carnival, Royal Caribbean and Norwegian Cruise Line are at least 50% off their January highs. However, all three have rebounded by 95% or more from March and April bottoms.


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