On Jim Cramer's Mad Money program Friday evening, he told viewers his game plan for this last week of September. Cramer noted that earnings continues on Thursday with Constellation Brands (STZ) . Let's check out the charts.
In this updated daily bar chart of STZ, below, we can see that prices made a high earlier this month. Prices have corrected down to test the flat 50-day moving average line. The bottoming 200-day moving average line is not all that far below the price action.
The On-Balance-Volume (OBV) line also made a peak earlier this month and its decline tells us of a shift from aggressive buying to aggressive selling.
The Moving Average Convergence Divergence (MACD) oscillator is pointed down and not far above the zero line. We could see a sell signal if earnings on Thursday disappoint.
In this weekly bar chart of STZ, below, we can see that STZ has stalled in a broad band of overhead resistance from 2019. Prices are above the 40-week moving average line but it is not pointed up.
The weekly OBV line has been in a decline for the past two years and that is not a good sign. The MACD oscillator is above the zero line but has begun to narrow telling us that the strength of the uptrend is waning.
In this daily Point and Figure chart of STZ, below, we can see a potential downside price target in the $166 area.
Bottom line strategy: I have no special knowledge of what STZ may or may not report for earnings on Thursday, but the charts and indicators are making me a little nervous of the long side. I would recommend a reduced long exposure.
