Carnival Cruise Lines gets beat down like a rabid dog, going from about $52 to just under $8 in the span of a few short weeks. now. this was, of course, as investors pondered whether or not Carnival will survive this beer bug crunch as they continue to suspend their operations out later and later. But on Sunday night we talked about how since CCL has gotten beaten down so much, literally any positive catalyst would cause a massive spike.

We also talked about how it has this previous pattern of running up cleanly intraday providing us with some exploitation opportunities. and then just the next day Monday morning we got that catalyst. it was announced that the Saudi Silver and Wealth Fund had taken a stake in Carnival. Ron That very same day, Carnival runs up about 25% providing one of the cleanest runs my heart could ever desire me cortisone.

But of course we love clean running because that lets us buy in when we pop above this. SMA Wynette confirmation, then sellout when we break that very same line at validation. But anyways, that's besides the point. Carnival ran up quite a bit when we talked about it Sunday it had literally closed at 849 and then boom Monday it closes after-hours trading at 1046 and opens Tuesday running up to nearly $13 Again, that's a 50% jump in the span of just Who trading days and in the meanwhile, nothing really changed.

The business model is still kaput and still like we won't have profitability for quite some time, and at the time of shooting this video, we're currently hovering around the eleven and twelve dollar range. But in this video we're going to be explaining whether or not CCL is a good deal at about twelve dollars or under twelve dollars and what scenarios does it make sense to take a position in CCL. But of course, the only thing that I asked and returned for all of this wonderful analysis is that you hit that ravishing like button. Also, feel free to let me know what you think about CCL in the comment section below.

Okay, so to start, it's obviously no surprise that the cruise industry as a whole got caught like a winter gnome in the summertime. And when it comes to Carnival or really any cruise line, its important to note that the question isn't will these companies eventually recover? Will the demand actually come back? We can be extremely confident that in a few short years the cruise industry will be bouncing back and shoveling food and bloated luxury into tourists mouths once again. So aside from the possibility of a second Heineken fever breaking out, this event is really just looking like a short to medium-term blow for the entire crew sector. So the question that you need to be asking isn't will cruises bounce back, but rather, when and more importantly, what cruise lines are going to be able to rough it out and survive during this period that they're all shut down in making zero revenue because at the end of the day, if a cruise line can survive until they start making money once again, it'll be right for exploiting the opportunity when they do indeed get that opportunity to start making money again.

and perhaps the ones that survive will have the benefit of having less competitions as some of their competitor. Cruise Lines Sink no pun intended. But what is the biggest indicator of a cruise line being able to rough it out during this crisis? Well, of course it's its ability to pay its expenses during the period that its business is shuttered, and Carnival Cruises is uniquely placed to do just that. It has a bit over a half billion dollars in cash on hand, and you could sort of get the relevance of this when you compare it to the other cruise lines.

When you compare it to Royal Caribbean in Norwegian they have nearly half that amount now now. Royal Caribbean and Norwegian are of course, smaller cruise lines, but but in terms of cash per size, this is actually not a bad amount. And to raise money, they've drawn out some credit lines. They've done a recent stock offering and of course they had yesterday.

Saudi Arabia Well, fund take a position in it to help them bolster through the crisis. But if the biggest issue is liquidity, what other bullets can Carnival fire in order to keep themselves alive? Well, a big one is to secure more credit by using some more of its assets as collateral. But what big assets do cruise lines have that they could just use for collateral? Well, those big fat expensive cruise ships. And this is exactly what Royal Caribbean did in March and it managed to secure a two point two billion dollar loan to stay afloat.

Again, no pun intended with staying afloat, but this method of taking in more liquidity. It's really something that's yet to be really tapped into by Carnival. And being that we're on Caribbean did already and Royal Caribbean has 27 billion dollars of assets, as compared to Carnivals 45 billion. We can see that there's actually quite a lot of potential in terms of collateral for Carnival.

but Charlie you idiot Carnival has huge expenses. They're not going to be able to pay all these expenses. That's a fair question. and how is it possible that a company like Carnival or even something like Royal Caribbean or any of the other cruise lines? How is it possible that they're going to be able to pay all their expenses while not taking in any revenue? Well, aside from what all the analyst monkeys are saying, the main expenses that Cruise Lines have are related to the direct costs and drastic costs of running entire ships, running their marketing departments, and running the rest of their full administrative duties.

But as ships are docked and administrative activities are mostly suspended, a large majority of the cost will be suspended as well. I'm not sure why so many analyst monkeys are writing up reports saying that expenses for ships we're going to stay continuous, but it is pretty obvious that if you suspend all cruises, you no longer have to pay for said cruises. If you don't have any cruisers, you won't have to pay to feed them, You won't have to pay for fuel, You won't have to pay for entertainment and so forth. Now, obviously, there's other expenses than running the ships, but my point is that most of the expenses come from literally running the cruises.

Okay, fine, but Charlie Who cares about the fundamentals? We are traders only. The technicals matter, Only the chart matters. Charlie Well, yes, as traders, we do focus on the charts, but the charts are motivated by the fundamentals. They're motivated by what's happening in the real world that's actually causing people to buy or sell and causing the price to move.

If you look at the chart. we are in this area where we, literally, in the long scheme of things, are pretty much still at the bottom. Like sure, we went up 50 percent from its lows, but that's nothing compared to the drastic amount that we are down. And folks, when you take into consideration the massive amount of upside to the low amount of downside, you could see how insane this opportunity is.

And especially when you consider that all we need to do to return back to this level is to return back to the level of profit that we react. Just a few months ago, we know that these are chartered waters that we could actually return to if the beer bug just disappeared. Now, it's not going to disappear and it's going to take a long time to regain. But the point is that we're not going into unchartered waters.

It's one thing if a company goes and makes a prediction to how much profit they're going to make if they do X y'see but Carnival has already made a ton of money during certain conditions, so we know if we get back to those conditions. it's not crazy to get back to making that sort of money. So the question really isn't will we return to this level of profit, but rather how long will it take for people to feel safe cruising again and at the same rates? They were a pre beer bug. and in the meantime, since we are trading solo, we can trade off literally any of the big reactions to nice catalysts such as we talked about a few days ago.

And just like the announcement of the Saudi wealth fund, we can trade off future reactions say in securing more debt via collateral or new funds taking interest and so forth and so on. Any show of possible strength in terms of the catalyst can cause insane running up just because it's trading so damn low. But at the end of the day, the best way to take advantage of Catalysts is by taking it simple, right. making it simple and plain the moves themselves.

So many people love to play the game of just buying in and then forgetting about it because they think Oh People say good investors. You know they invest and then they hold. But when we're trading, that's a completely different beast. You're literally playing off the price action.

So that means when you have price strength, you want to take advantage of the price rank, but then sell out when you have price weakness. and that's the key to being a successful trader. With investing, you can invest in something and then forget about it for years. Which trading and trading just means buying and selling something in under a year.

If you're trading, that means you need to be playing off concrete action. But let's say you're considering taking a long-term swing trade in this? What? It makes sense to buy in at the price we're at now. Well, of course it really depends on how fast Carnival is able to get back into business because right now Carnival is making zero dollars in revenue and they can't push any new cruises. But if people are starting to think that this crisis ends in the fall, hey, then Carnival has a chance to start making money again.

But if it's winter 2021, that's a whole nother story. But honestly folks, it really doesn't matter As traders, our goal is to make money. So what motivates the price action? When it comes to being a trader, it's never about what is actually happening, but what investors think is happening. Because investors.

they're the ones that drive up the share price. Let's take the overall market. for an example. over these few weeks of the crash, we were panicking and that happened week after week.

and we knew we were in a crisis here. We knew we were in a crisis here, and we knew we were in a crisis when we hit this original bottom at 2:17 Now, during the sell-off we were all considering how long this crisis was going to continue, what the actual impact on the economy would be, and so forth. So it makes sense that it's crashing. But the interesting thing is this behavior after we hit 2:17 So at 2:17 we acknowledge that we're in some sort of crisis and we've hit some sort of temporary bottom.

But after we hit this, it ran up to here. Yet, we were still in the same crisis that we were in here at 2:17 But the reason that I ran up is because investors felt better. Obviously, this is an oversimplification, but nothing on the underside changed. Only the feeling changed.

Companies at this point did all of a sudden start thriving more than they did here. In fact, they were doing worse because there's a longer time without revenue. No, no, but that doesn't matter because investors were feeling better. There was more upward sentiment in the market.

They couldn't operate here, and even more, can't operate here yet. The price went up. Same thing. does it continue to sell-off and then rose again.

A lot of traders think that the stock market is built on solid logic and smart business numbers. Well, that's cute that you think that, but it's not true. It's a huge lie. and if you understand this, you can understand how to take advantage of these opportunities.

When they come up and relating this back to some practical advice on CCL Understand that what we care about is not actual recovery, but rather investors thinking that we have a recovery due to some news catalyst or some other event that allows us to buy into a high probability setup. And when we get our high probability setup, we trade like spoiled brats. But we don't really know how investors are going to react to CCL going forward. So the way that you trade it is by waiting until we have the catalyst.

Just like we have to catalyst from the Saudi Wealth fund earlier, you wait for catalysts that allow investors to get emotional in and allow us to see the share price rise up and take advantage. Anyways, folks, I Do hope that this video is helpful if you have any questions. Feel free to reach out to be in the comment section below if we're wondering what stocks were currently watching, you can join us at Zip Trader Circle. We post lightly watch lists and we have a bunch of other different resources there if you are looking to learn how to trade.

And lastly, if you're wondering what broker to trade these stocks on I Always like to send new traders over to Weeble. They are a very powerful platform and you will get not one but two free stocks if you sign up and deposit any amount with our link in the description below. Anyways, have a great day, stay safe and trade like a spoiled brat.