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Stock Of The Day: Is The Carnival Rally About To End?

Benzinga · 1d ago

Shares of Carnival Corporation & plc (NYSE:CCL) are drifting sideways Monday. They gained almost 10% on Friday after offering upbeat guidance.

If the move higher continues, there is a chance it ends around the $32.50 level. Our chart shows it was resistance in September; levels that have previously been resistance can become so again. This is why Carnival is the Stock of the Day.

When a stock reaches a resistance level, reverses, and trends lower, holders of shares purchased at that level regret their decision; they believe they made an error.

A number of these unhappy investors decide to hold onto their losing positions. They also decide that, if and when they can, they will close out their positions at breakeven.

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This means that if the shares rally back up to the level that had been resistance, they place sell orders. If there is a large quantity of these orders, it will result in resistance forming at the level again.

There was resistance for Carnival around $30.00 in October. But on Friday, after offering the upbeat guidance, the shares blew right through it

If the uptrend continues, there is a chance there will be resistance around the $32.50 level. As shown in the chart below, there was resistance around this price in September. Remorseful buyers who purchased shares at that time will enter the market as sellers if the stock reaches $32.50.

If there is a large quantity or concentration of sell orders, it could form resistance at the level again. If Carnival gets there, the rally may stall out or end. A reversal may even follow.

Stocks sell off resistance when some of the sellers who created the resistance become impatient. They reduce the prices they offer their shares at. Other impatient buyers do the same, and this drives the price lower.

Traders will be watching Carnival if it climbs back to $32.50. It could prove to be an important crossroad for the stock.

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