Bounce-Back Brings Cruise Lines Up Double Digits

Tuesday, March 10, 2020

Pre-market futures are way up this morning, following the worst market sell-off since the beginning of the Great Recession in late 2008. Dow futures are currently +851 points, which under any normal circumstance would be incredibly beneficial to the overall market. But as we say repeatedly here of late, we are not living under normal circumstances.

The Dow lost more than 2000 points Monday, the Nasdaq down nearly 625 points and the S&P 500 -225.8, each down well more than 7%. So filling in gaps, covering shorts and extreme bargain hunting are carrying today’s pre-market. This is in no way endorsing that the coronavirus — or oil price war just begun over the weekend between OPEC (Saudi Arabia) and Russia — is on the wane; on the contrary, many analysts expect another down-leg sometime in the near future.

Should we need convincing of this, consider that Norwegian Cruise Lines (NYSE:NCLH) is up 11% at this hour. Carnival (NYSE:CCL) is up 10%. United Air Lines (NASDAQ:UAL) has gained 6.6% in today’s pre-market and Delta (NYSE:DAL) is +3% — even as it announces this morning it has seen a 25-30% decline in bookings, which is expected to accelerate going forward.

No one expects cruise lines and airlines to gain in near-term bookings, so that should tell you all you need to know about this rebound. Those investors looking to stay long would do better to just not look at their investment statements, as even with an 800+ gain in the Dow, we’ve given back a year’s worth of market gains. This current market is business for short-term players, looking to swoop in on oversold equities before panic subsides.

Going back to our Norwegian Cruise Lines example — and not to pick on them directly; we see this company properly representing the Consumer Discretionary/Leisure Products & Services industry at this stage — shares closed at all-time lows yesterday, at $19 and change. The buyback has brought shares up to $22 per, which remain below its 2013 IPO price.

So take this pre-market bounce with a grain of salt. Along with a vitamin regiment and plenty of soap and water.

Mark Vickery
Senior Editor

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