Breaking Out

A few charts I want you to see…

Sean Russo and I keep a list of the best stocks in the market and these caught my eye at the end of the week. The travel boom was supposed to come and go with the end of the re-opening period after Covid, but it didn’t. The desire to be on the move again, among both vacationers and business travelers, just hasn’t faded away.

I want to show you the best managed hotel chain in America (maybe the world) as well as the best run airline (which is sort like being the leper with the most fingers, but bear with me on this one). Both of these names hit the list in late October and have been hanging out near highs ever since.

Check out Marriott (MAR) which has an offering for every type of traveler at every income bracket:

In the bottom pane you can see that relative strength (RSI) has cooled off after being somewhat overbought as the stock made new 52 week highs this fall. It could be coiling for its next burst higher. That 50-day / 200-day moving average crossover could be the precursor to a coming rally. This is one of only four names within the Consumer Discretionary sector on our list right now, along with Carnival (CCL), Amazon (AMZN) and Garmin (GRMN). Keep an eye on that one.

Also in the travel category is Delta (DAL), my favorite airline for my own travels. The one problem with Delta for us as a family is that you can’t transfer credits to another family member. I have a kid in college and I am constantly traveling on business. I need that flexibility given how often plans change and credits are banked. JetBlue will let us do that so we don’t always book stuff with Delta, but I would if I could.

Anyway, the stock is approaching a meaningful technical level and I wanted to show it to you. It’s categorized as an Industrial although I think of it as a Consumer Discretionary in real life. It’s selling for 8 times earnings and just finished the week with an RSI of 70. The momentum here could keep going.

Note the 50-day / 200-day moving average crossover as the stock leaves behind its previous range.

Delta smashed expectations when they reported earnings on October 10th and the stock has been on a tear ever since. Here’s what the CEO told Wall Street:

Now let me tell you about the $60 level it’s about to challenge…

Here’s a long-term look back. You can see that 60 was the pre-pandemic high prior to the Chinese lab leak that no one has ever taken responsibility for or apologized about:

As Delta approaches those old highs from the world we used to live in, things get very interesting. If she breaks through, I think you’d want to be long if you’re a trader. I also think you’d want to be aware if you’re an investor. If Delta’s share price is breaking out to a new decade high, there’s probably some signal there in terms of the consumer / state of business travel.

Trust price over narrative. Subscribe to the Compound Insider for more of our research and ideas. It’s free and takes less than a second.

Election Coverage on CNBC

I wanted to tell you that I’ll be at the New York Stock Exchange for the election this coming Tuesday night, November 5th. CNBC is doing a whole special event from there from 7pm ET til midnight. Tom Lee, Adam Parker and I were asked to be on the show as contributors and we’re pretty excited to be a part of it.

So, if you need a break from the fascists on Fox News or the communists on CNN, we might be a good middle ground to hear from the investing and business perspective. I’m just kidding, don’t write emails.

More details via CNBC:

Add us to your election night mix. I don’t know how much airtime I will be getting personally, but they’re loading the show with experts and we’re going to try to give you what you need all night.

The Compound and Friends

Michael and I had a blast talking with our friend Jack Raines of the Young Money blog and columnist / editor for Robinhood’s Sherwood media offshoot. Yes, we did Halloween costumes. I do not apologize 🙂 

Jack is hilarious, whip-smart and completely plugged into what’s going on among active traders and younger investors these days. We cover the latest monster stock and bond offering from Michael Saylor’s Microstrategy corporation-turned-Bitcoin fund, the rise of Reddit, people making election bets and a whole lot more. Watch below or listen on your favorite podcast app here.

The Compound’s Post-Election Special!

Okay, last thing for today - I wanted to let you know that Michael Batnick and I will not be doing What Are Your Thoughts on Tuesday because I will be on CNBC all night (see above) and there’s probably nothing else worth paying attention to that evening anyway besides the election. But! We are doing a post-election special on our YouTube channel on Wednesday after the close. And! We’re making it an Animal Spirits crossover event, so Ben Carlson will be joining us. And! We’re adding Ritholtz Wealth’s chief strategist Callie Cox to the mix as well. It’s going to be absolutely epic. We’ll be coming with tons of charts and data, perspective and context, to let you know we see things.

Subscribe to the Compound’s YouTube channel so you’ll get the alert.

See you this week, enjoy the day! - DTJB