As vacation stocks spiral, Piper Jaffray technician picks a travel stock to buy and one to avoid

Investors in travel stocks like Caesar's Entertainment, Wynn Resorts and Expedia took flight this week, sending the companies' shares sharply lower.

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.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more