Editorial Contributor
Carnival - Long opportunity Should the US sink into a recession next year, Carnival’s share price would likely follow the American economy beneath the waves. However, that is not what I am expecting to happen. I believe that America’s squabbling politicians will reach an agreement to prevent disastrous rises in taxes and cuts to spending, and that the US recovery will therefore continue. This should be helpful to the world’s largest operator of cruise ships, a classic cyclical business.
CHART - CARNIVAL
Carnival’s stock price has been sailing determinedly higher for much of 2012, and for the most part, fairly smoothly. More importantly, though, it does not look overstretched. Its monthly relative strength index (RSI) is nowhere near the frothy extremes above 70 per cent which have coincided with significant tops in the past. This leaves the way open for gains towards 3000p in due course. Bounces from around the 13-day EMA make obvious buying entry-points.
54 | www.financial-spread-betting.com | December 2012