Piper Jaffray technician picks a travel stock to buy and one to avoid


Craig Johnson, chief market technician at Piper Jaffray, says one consumer leisure stock is working for him.

“The best stock, from our perspective, is Boyd Gaming. It’s going to have more of a domestic focus,” Johnson told CNBC’s “Trading Nation” on Thursday.

Boyd generates all of its revenue domestically, insulating it from some of the international headwinds weighing on its competitors. Worries over flagging growth in China gambling destination Macau contributed to losses in casino stocks Caesar’s, Wynn and MGM in recent sessions. Gross gaming revenue in Macau for July increased by more than 10 percent, but was weaker than anticipated.

Boyd’s technicals are also showing off strength, said Johnson.

“You basically have just pulled right back to the uptrend support line. You’ve got good support right around $34 where you have the uptrend, and also the rising 40-week moving average. A close above about $39 is really going to set you up for another leg higher,” Johnson said.

Boyd is still a 6 percent rally from $39. It traded above that level on an intraday basis on July 27, but failed to hold the level through the close. It closed above $39 at the beginning of February before pulling back through to the beginning of April.

Like the Macau-exposed casino names, cruise lines such as Royal Caribbean Cruises and Norwegian Cruise Line are looking weaker to Larry McDonald, editor of the Bear Traps Report.

“The companies with the most global exposure, like the cruise lines, those are the ones that are really suffering,” said McDonald on Thursday’s “Trading Nation.” “I think we’re in the middle of the early stages of a recession in China. They’re doing their best to prevent it, but that 7 percent move in the dollar really has shocked the global economy and we’re seeing kind of a feedback loop across globally exposed stocks.”

Carnival Cruise Lines, Royal Caribbean and Norwegian each generate at least one-third of their revenue outside of North America.

On a technical basis, Carnival is flashing some warning signals, said Johnson.

“Carnival is rolling over, a distributional-looking chart,” he said. “It looks like there’s another leg starting lower here in this stock and we’d be selling that and taking profits and rolling that over into Boyd.”

Carnival has dropped nearly 19 percent from a 52-week high set at the end of January. Its decline puts it in a correction, but just shy of the 20 percent drop that indicates a bear market. Carnival is down 11 percent for the year.

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