Below are two charts from two very different companies in two very different sectors yet with interesting parallels. First, we have Netflix (NFLX) which has been following an ascending channel for years and recently has been blowing higher, day after day, on the heels of its earnings.
A very similar pattern is seen with Royal Carribean (RCL), which has about as much in common with Netflix as chestnuts have with non-dairy creamer.
As similar as these patterns are, take careful note of the differences:
- RCL briefly broke its channel and stayed there for over a week, suggesting inner weakness;
- RCL seems to have stalled out at its midline (the dashed line exactly in between the solid parallel lines that constitute the channel);
- In contrast, NFLX has jumped right over its midline and has been padding gains
My conclusion? That RCL is much more vulnerable to a downturn than NFLX.
