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Travel stocks are ‘very vulnerable to a sell-off’ heading into Thanksgiving, trader warns

The travel trade is in trouble.

Airline, hotel and cruise line stocks slid on Friday ahead of Thanksgiving week after the CDC issued a warning on traveling for the holiday amid climbing Covid case counts.

Expedia data released before the CDC’s announcement showed 60% of U.S. consumers said they would not be traveling for Thanksgiving. Those who will travel will go an average of 250 miles away from home, down from 450 miles a year ago, the data revealed.

Travel stocks’ road to recovery will likely be a bumpy ride, according o Boris Schlossberg, managing director of FX strategy at BK Asset Management.

“The market is discounting an absolutely perfect scenario that hasn’t even occurred yet, which is the idea that a vaccine is going to immunize everybody and we’re all going to go back to travel,” Schlossberg said Friday on CNBC’s “Trading Nation.”

“Between now and then, all of these companies are going to have a very, very hard time surviving and actually making any profits,” he said. “To me, a lot of these names have been overbought at this point, and I think they’re actually very vulnerable to a sell-off as they see very, very little engagement from the consumer.”

Schlossberg warned that consumer activity risks “retrenching” in the coming weeks amid the nationwide rise in Covid cases.

“At this point, the behavior of the consumer is going to take much longer than the market thinks to come back for these companies to really perform well,” he said.

One travel play seems to have been “vaccinated” before the rest of the industry, Piper Sandler’s Craig Johnson said in the same interview.

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