Remember This Should We Get Another Market Panic…

Money Crash Panic Stock Market

People returning to work after a holiday are often told by their work colleagues that they look well.

But is this really true? Do holidays have an impact on your health, beyond a tan that quickly fades?

A study conducted by the UK’s largest not-for-profit healthcare provider, Nuffield Health, suggests so.

The study compared key health markers in holidaymakers with people who stayed at home and continued working.

Their research showed improved sleep, reduction in blood pressure, and even a fall in blood glucose levels, reducing the risk of diabetes. Those health benefits were sustained for at least two weeks after returning home, and sometimes lasted for months in some test participants.

Working hard is important but so is taking time to vacation, rest and recuperate.

This seems to be a message Americans are taking to heart.

They’re travelling and vacationing more than ever before, if the charts are any indication.

Hotels, cruise liners and resort casinos have been some of the best performing stocks in the US this year.

Wynn Resorts Ltd [NASDAQ:WYNN], which operates high-end hotels and casinos, is one of the top five best performing stocks in the S&P 500 so far this year.

Royal Caribbean Cruises Ltd [NYSE:RCL] and hospitality company Wyndham Worldwide Corp [NYSE:WYN] were also among the index’s best performers.

Here’s a relative comparison chart of the three companies from the start of the year, compared with the S&P 500 stock index.


Source: Optuma
[Click to enlarge]

Travel and leisure shares are clearly performing better than the overall index, by a long way.

This is purely discretionary spending, and it shows the US consumer has some confidence about where the economy sits right now, and that he or she will have a job next month.

International and domestic travel is growing in the US, and the recent statistics only confirm what the charts are already telling you — that spending on hotels, leisure and travel is increasing just about every month in the US.

Meanwhile, cruise passenger growth has been on the rise worldwide…


Source: The Wall Street Journal
[Click to enlarge]

And to bring it back home, and do something similar to our local exchange, here’s a comparison chart of companies like Webjet Ltd [ASX:WEB], Corporate Travel Management Ltd [ASX:CTD], Flight Centre Travel Group [ASX:FLT], Qantas Airways Ltd [ASX:QAN] and Air New Zealand Ltd [ASX:AIZ], compared with our own index from the start of the year.


Source: Optuma
[Click to enlarge]

While the ASX 200 Index [ASX:XJO] remains flat, travel-related stocks have all moved higher since the start of the year.

If the Aussie consumer was feeling pinched and under stress, you’d be expecting these types of stocks to break lower, not higher.

When we relate that with what’s happening with US leisure stocks, the question you then ask yourself is: Does any of this suggest an imminent recession?

Now, there are a number of reasons why knowing all this is helpful, but the most important one is this…

Stock markets are emotional. Remember the 1000-point plunge of the Dow in August 2015? At the time, it seemed the world was ending.

Remember, also, the last major panic in January 2016, when US stocks posted their worst ever 10-day start to a year…and the Royal Bank of Scotland advised clients to sell everything. Remember all the emotion?

That last panic was over a year and a half ago now; we’re probably due for another one.

And should we get another panic, based on all the discretionary spending going on around the world, just don’t expect a complete stock market collapse and recession. Not this year anyway, based on the charts.

In our view, markets are likely to recover, just like the previous two panics mentioned.

That is very tradeable knowledge, because, should we get another market panic this year, you’ll know it’s a potential opportunity to do the study on the retracements of good stocks already in strong, solid weekly and monthly uptrends.

Good trading,

Terence Duffy,
For Markets & Money

Editor’s Note: This article was first published in Money Morning Trader. To learn more about how understanding charts could help you to improve your success in the markets, click here.

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