Norwegian Cruise Stock: Is It a Buy After 'Inflection' Quarter?

Posted by jbrumley on May 11, 2022 12:00 AM

-- Norwegian Cruise stock is rallying after missing on earnings and revenue estimates --

By Bret Kenwell,

Norwegian Cruise Line (NCLH) stock on Tuesday has been all over the place. For that matter, the stock has been all over the place for several days.

On Monday, the stock closed near the session lows, down 13% on the day and more than 21% over the prior three sessions. The big decline came ahead of the company's earnings report this morning.

The trio of cruise operators remain in focus. That's as Norwegian, Royal Caribbean  (RCL) and Carnival (CCL) near full fleets.

It's got customers wondering just how full these cruises will be when they finally splurge for that nice vacation.

Turning to the earnings: Norwegian posted top- and bottom-line misses. Yet the stock opened higher by more than 8%, reversed into negative territory and is currently higher by 2.5%.

Despite the headline numbers missing expectations, investors appear focused on the good news, which came when the company said it hit "an inflection point" as operating cash flow turned "slightly positive."

Trading Norwegian Cruise Stock

Weekly chart of Norwegian Cruise stock

Chart courtesy of

While it's good to see a stock trading higher after what appears to be bad news, the stock is still trapped in a downtrend. Further, it's still lower for the week and has fallen for three straight weeks.

If it rallies from here, I want to see Norwegian Cruise stock take out the 61.8% retracement near $17.50 and reclaim this week's high. If it can do that, the stock has a road map for getting back to $20.

There, it would find the 10-week and 21-week moving averages. That's followed by channel resistance and the 50-week moving average near $23. It would likely need a marketwide rebound to get to these further areas on the chart.

On the downside, the first-quarter low looms large at $14.90. A break of this level could usher in a test of the 78.6% retracement down near $12.90. Below that and $10 could very well be in play.