We reviewed the charts of Action Alerts PLUS holding Constellation Brands Inc. (STZ) back in March and we had our concerns that the rally could keep going, we noted that, "There are enough signs that the recent rally in STZ is weaker than the rally to the January high. Could this be a double-top formation? Maybe. The best approach is to raise sell stop protection if you are still long." O
On the upside we also said, "In this Point and Figure chart of STZ we can see a $251 price target until a reversal to the downside develops." STZ showed a little more weakness into the end of March and over the past three weeks has managed to rally to a new high close yesterday. Let's go through our technical check list again.
In this updated daily bar chart of STZ, below, we can see a recent dip or test of the rising 50-day moving average line. The slower-to-react 200-day line still has a bullish slope and intersects down around $212.
The daily On-Balance-Volume (OBV) line has not yet confirmed the new high price with its own new high so that still bears watching. The trend-following Moving Average Convergence Divergence (MACD) oscillator just crossed to the upside for a fresh outright go long signal.
In this updated Point and Figure chart of STZ, below, we can see the $251 upside price target that we pointed out last month. A trade at $233.83 will be a new high for the move up and would refresh the trend higher. A reversal to the downside to $218.10 would break the shorter uptrend.
Constellation Brands is not the only beverage maker and a look at Molson Coors Brewing (TAP) would be interesting for comparison purposes. The last time we lifted a glass to TAP was not quite a year ago, and I gave the charts a thumbs down - "Summer is coming and I can look for forward to a cold one, but for shares of TAP I would have a cold reception. The $94-$97 area should act as resistance and $80 is likely to be next major support."
TAP has broken below the $80 support area so what can we expect next?
In this daily bar chart of TAP, below, we can see a downtrend - lower lows and lower highs. TAP is trading below the declining 50-day moving average line and the bearish 200-day line. The daily OBV line has made lower lows the past year and is not telling us that buyers of TAP have become more aggressive - sellers are still in charge. In the lower panel is the 12-day price momentum study and a February/late March bullish divergence is not resulting in any upside price movement.
In this Point and Figure chart of TAP, below, we can see how the downtrend has been playing out since 2016. A new downside price target of $63.30 is being projected.
Bottom line: TAP is pointed lower on the charts and it would probably take a rally above $82 to improve the picture. Avoid the long side or consider a pairs trade with STZ.
Boston Beer Co. (SAM) is a different story when it comes to the charts and indicators. In this daily bar chart of SAM, below, we can see a nice uptrend. Earlier this month SAM broke out to the upside above the round number of $200. The $200-$180 area should now act as support on a pullback. SAM is above the rising 50-day moving average line and the rising 200-day line was successfully tested in early March.
The OBV line has made new highs telling us that buyers of SAM have been more aggressive. The MACD oscillator is also trending up in a clear buy mode.
In this Point and Figure chart of SAM, below, we can see an upside price target of $252. Buy a round lot or a few six packs. Risking below $200 and looking for $250 on the upside.