Cruise stocks saw a sharp rally on Tuesday, July 19, after a surprise announcement by the U.S. Center for Disease Control and Prevention (CDC). Namely, the CDC stated that they’re ending their Covid-19 Program for Cruise Ships while continuing to provide guidance to the cruise lines and travelers.
This new move represents the latest step in relaxing restrictions for the cruise line industry. In short, the CDC program required cruise operators to report the number of cases on ships, maintaining their participation in the program voluntarily.
Further, an additional wind in the sails of cruise stocks was provided by China, as premier Li Keqiang at the World Economic Forum on July 19, claimed that China would pursue reopening policies.
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Cruise operators surge
Despite the fact that cruise line operators are subject to testing requirements of each port or country, the stocks of cruise operators jumped on the CDC and China news.
Specifically, Carnival Corp (NYSE: CCL) gained over 7% for the session, while over the last month, CCL has been trading in the $8.10 to $11.05 range, with prices rising strongly. On the daily chart, the resistance is around $14.89, while support is at $9.30.
Elsewhere, Royal Caribbean (NYSE: RCL) rose over 5%, while over the last month RCL traded in a range between $31.09 and $42.81. A resistance line is located at $36.37, with a support line at $33.33.
Finally, Norwegian Cruise Line Holdings (NYSE: NCLH) jumped over 3% in the last trading session, while the stock traded in the $10.47 and $13.58 range over the past month. Meanwhile, a support zone is identified between $11.19 and $11.32, whereas the resistance line is located at $18.45.
Possible volatility
Meanwhile, Citi’s analyst James Hardiman commented on the CDC decision and the steps that cruise lines could take.
“This marks the elimination of one of the final major hurdles to a return to a more normal cruising environment. At this stage, it would appear likely that most, if not all, cruise lines would drastically scale back the testing and vaccination requirements on their ships to align more closely with airlines.”
Since the cruise industry has been reeling since the pandemic days, some positive developments may help the stocks return some of their previous luster.
In spite of the short-term jump, market participants should brace for more volatility in cruise stocks as global macro trends still look unfavorable.
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