Marriott International, Inc. (MAR) stock is trading lower on Tuesday morning after the hotel giant met earnings per share (EPS) estimates of $1.56 but came up short with $5.3 billion in second quarter revenues. Those revenues fell nearly 2% year over year, with properties all across the planet hitting the low end of previous projections. The shortfall forced the resort and lodging giant to lower fiscal year 2019 EPS guidance by about 2.5%.
The company offers insight into the "American brand" overseas, with trade and geopolitical tensions encouraging many foreigners to think twice about U.S. products and services. Apple Inc. (APPL) has been a poster boy for these headwinds, reporting a steep decline in Chinese iPhone sales. However, McDonalds Corporation (MCD) outlets are still jam-packed internationally, indicating that some exports are so iconic that political ideology gets placed on the back burner.
Marriott lies between these two extremes, with international bookings underpinned by a business class that's more interested in profits than politics. However, their loyalty can't repeal the economic cycle, with the surging bond market indicating that recessionary forces are growing rapidly. The hotel company won't be immune from that downturn because business travelers and vacationers will be taking fewer trips.
MAR Long-Term Chart (1998 – 2019)
A March 1998 initial public offering opened in the mid-teens, giving way to a quick decline that posted an all-time low in the single digits in October. A two-legged uptick stalled at $25.25 in May 2001, marking the highest high for the next three years, ahead of a 2002 slide to a four-year low that undercut the IPO opening print. The subsequent bounce marked an excellent buying opportunity, yielding steady gains during the mid-decade bull market.
The uptrend topped out in the low $50s in the second quarter of 2007, while an orderly pullback escalated into a full-blown panic during the 2008 economic collapse, undercutting 2000 and 2002 support before bottoming out just above the 1998 low in November. It took more than five years to complete a round trip into the prior high, generating a 2014 breakout that ended in the mid-$80s in 2015.
The stock cleared that barrier after the presidential election, lifting in a powerful uptrend that posted an all-time high at $149 in January 2018. It fell to a 17-month low in December and turned higher into 2019. That impulse cleared the .786 Fibonacci sell-off retracement in June and stalled within five points of the 2018 high about three weeks ago, while this week's decline has landed on top of that harmonic support level, which has aligned with the 200-day exponential moving average (EMA).
The monthly stochastics oscillator entered a buy cycle in September 2018 and crossed into the overbought zone in April. It has now crossed to the downside, confirming a fresh sell cycle that could last into the fourth quarter. However, short-term sell signals won't go off unless the stock breaks the Fibonacci retracement, which would then open the door to the 50-month EMA rising from $107.
MAR Short-Term Chart (2017 – 2019)
The on-balance volume (OBV) accumulation-distribution indicator highlights steady institutional buying interest that faltered in March 2018, yielding orderly selling pressure into March 2019. Buying power since that time has matched mixed price action, turning lower at the same level as the 2018 downturn. However, this marks a pause rather than an exodus at this point, while bulls and bear draw battle lines under $130.
The Bottom Line
Marriott reported flat second quarter revenues and warned about 2019 profit performance, triggering a mild downturn that has dropped shares of the lodging giant into a test at support between $128 and $130.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.