Constellation Brands (STZ) was downgraded by TheStreet's Quant Ratings service Wednesday. Let's check out the charts and indicators.
In this daily bar chart of STZ, below, we can see that prices have been testing the rising 200-day moving average line since June. Tests were in June, July, August and September. The On-Balance-Volume (OBV) line shows a rise into late July but then the OBV line shows the start of softness. The Moving Average Convergence Divergence (MACD) oscillator is bearish as it moves below the zero line.
In this weekly Japanese candlestick chart of STZ, below, we see a weakening longer-term picture. Prices have turned sideways after a strong rally from the 2020 nadir. STZ has been testing the upward sloping 40-week moving average line.
The OBV line has been moving lower from May and displays a bearish divergence when compared to the price action.
The MACD oscillator has weakened from the middle of 2021 and is a longer-term bearish divergence when compared to the movement of the share price.
In this daily Point and Figure chart of STZ, below, we can see a potential upside price target in the $299 area but a trade at $232 could weaken this chart.
In this weekly Point and Figure chart of STZ, below, a trade at $228 should weaken this chart.
Bottom line strategy: The charts of STZ are weakening and the combination of bearish divergences and a quantitative downgrade are not a good combination. Traders should take a cautious stance on trading.
