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Why a second Covid wave may not hit travel stocks as hard as expected

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Marriott, Booking Holdings up after earnings — What to do with travel stocks now

Travel's troubles might slowly be waning.

Even as U.S. coronavirus case counts spike at a record pace, the industry may have some newfound "leeway" in how it prepares for a possible second wave, Chantico Global CEO Gina Sanchez told CNBC's "Trading Nation" on Friday, three days before Pfizer and BioNTech announced that their coronavirus vaccine was more than 90% effective in preventing Covid-19.

"The states will have to do something. However, I don't think there's a tremendous appetite for a full lockdown. That political will just isn't there," said Sanchez, also chief market strategist at Lido Advisors.

"If anything, I think that companies will have some leeway in order to figure out how to do this in a safe way, which means that we may not see the same kind of hit as we saw in March," she said.

That's because consumers are growing increasingly frustrated with staying home, Sanchez said, adding that many are opting for road trips over flying, which many still consider to be of higher risk.

"There are far more road trips, and those road trips are ending at hotels," Sanchez said. "Demand for big corporate travel isn't back yet, but it's going to keep these hotels continuing to grow back out of this hole, so, I don't see them going away quite yet. So they're not dead yet, but I think that it's going to be some rocky road from here to the end of the year."

Craig Johnson, senior technical research analyst at Piper Sandler, said the uncertainty was causing a bit of a "bifurcation" in consumer spending.

While the consumer discretionary sector, tracked by the XLY ETF, has been moving higher with few technical obstacles, stocks such as Marriott are taking a harder hit, Johnson said in the same "Trading Nation" interview Friday.

Marriott and Booking Holdings reported earnings above analysts' expectations last week, with both companies noting that travel trends were improving despite continued pressure on their businesses. Booking Holdings CEO Glenn Fogel told CNBC on Friday that October's rise in Covid cases and restrictions dampened the online travel giant's results for the month.

Citing a chart of Marriott, Johnson noted that the stock has been forming a pattern known as a "symmetrical triangle" that he said typically indicates "indecision."

"As you see that sort of indecision on the chart, you're either going to break out or you're going to break down," Johnson said. "The longer-term setup for Marriott would suggest that- those types of symmetrical patterns resolve themselves in the direction of the preceding trend, and I think, with the uptrend break that we've seen on a monthly chart, that Marriott will take another leg lower."

Any break below the $90 level would register as a "clear breakdown" for Johnson. Marriott shares closed up nearly 3% at $103.89 on Friday. After the news on the vaccine, Marriott shares jumped more than 18% in Monday's premarket, trading at $122.94. Booking Holdings stock gained 12% in Monday's premarket, trading at $1,999.88.

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