MAR: Marriott International Ready to Breakdown?

A descending triangle pattern has emerged in the chart of Marriott International Inc. (MAR - Get Rating). This is a bearish pattern and if the support level is broken, a breakdown could occur.

MAR is a leading worldwide hospitality company focused on lodging management and franchising. The company operates over 1.4 million rooms in 7,600 properties across roughly 30 brands. Its largest brands include Marriott, Courtyard, and Sheraton.

The company has struggled on account of the pandemic and has suspended its share repurchase program and dividend payments for the time being. However, MAR is seeing improvement in occupancy and bookings in China. As the economy opens up, the company should benefit from its focus on expansion initiatives and its loyalty program.

MAR had $2.8 billion in cash as of the end of the year compared with $1.2 billion in short-term obligations. Both earnings and sales were down in the most recent quarter. Earnings fell 92% year over year, while revenue dropped 59.6%.

Even with a drop in growth, the stock appears overvalued with a trailing P/E of 219.45 and a forward P/E of 59.88. The stock showed bullish momentum in the first couple months of the year, but performance has since been mixed.

Take a look at the 1-year chart of MAR below with my added notations:

Chart of MAR provided by TradingView

MAR has formed key support at $140 (green) over the past couple of months. In addition, the stock is also declining against a down trending resistance line (red). These two lines have MAR stuck within a common pattern known as a descending triangle. Eventually, the stock will break out of it.

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A short trade could be made on a break below the $140 support level.

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MAR shares fell $0.26 (-0.18%) in premarket trading Thursday. Year-to-date, MAR has gained 10.31%, versus a 11.62% rise in the benchmark S&P 500 index during the same period.

About the Author: Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...