PreMarket Prep Stock Of The Day: Royal Caribbean

While many issues have distanced themselves from their March lows and several have gone on to make new all-time highs, others have lagged. One of those is Royal Caribbean Cruises RCL, which is the PreMarket Prep Stock Of The Day.

Smooth Sailing In Early 2020: After ending 2019 at $119.28, Royal Caribbean rallied along with the broad market in January. In fact, it matched its all-time high from January 2018 ($135.65), when it peaked on Jan. 17 at $135.32.

Interestingly, it shed more than $5 in the next session, falling to $129.68 following the outbreak of the coronavirus in China. On only one occasion did the issue trade above that price, on Jan. 23, when it reached $129.77.

Then Came COVID-19: The issue began to sink in late February and early March along with the S&P 500 index. However, it had a horrible relative performance. Whereas the index cascaded 39%, RCL cratered by 86%.

It didn't find a bottom until March 18, when it reached $19.25, which was three days of ahead of the index making its capitulatory low.

The decline washed away nearly nine years of gains in the issue and coincided with its October 2011 low ($18.70).

The Ship Is Righted: While the issue underperformed on the decline, it has outperformed on a percentage basis on the rebound. At this time, the index has rebounded 54% at its current level (3382) and was higher by 64% at its peak earlier in the month.

By virtue of coming for a much lower price, Royal Caribbean had rebounded 292% at its peak in June ($75.55). At its current price around $64.22, it's now higher by 234% off its March low.

Treading Water: Since peaking in June, the issue has been in a trading range, ebbing and flowing with the news regarding the pandemic. That wide range has been between $46 and $75. Over the last 10 sessions, the trading range has reduced to $60-70 and has ended the last five sessions right in the middle at the $65 area.

For the most part, the issue tends to rally on days with favourable vaccine news or a reduction in reported cases or deaths. On the other hand, it tends to decline on days when the news is negative.

Before today's open, the CDC extended its "No Sail" order for another month. Carnival Cruise CCL announced that travel agents are notifying guests it's cancelling cruises from all U.S. ports except Miami for the remainder of the year.

Price Action: Despite the news, RCL is basically flat on the session at $65.13 as 1:30 p.m. ET. Moving forward, the issue has found support in three of its last four sessions (including today) at the $63.50 area, but hasn't been able to distance itself from those lows.

Based on the daily charts, if that level is breached the next support level comes in at its Sept. 25 low ($61.78). After that, support may be limited until its Sept. 24 low ($58.27).