Constellation Brands Inc. (STZ) pushed higher in early trading after fourth-quarter earnings per share bested even the highest estimate turned in by analysts. That price strength did not last long, however. When a security ignores bullish news I take that as a sign of weakness.
Let's check out the charts.
In the daily Japanese candlestick chart of STZ, below, we can see that prices were roughly cut in half in a few short weeks. Prices bounced back part way and then pulled back again. Thursday's candle pattern looks like a bullish hammer formation but we are not getting a confirming bullish candle pattern Friday (at least not so far).
The volume pattern is not particularly constructive and volume was light on the bounce. The On-Balance-Volume (OBV) line is not showing a good return of aggressive buying and the Moving Average Convergence Divergence (MACD) oscillator is narrowing after a cover shorts buy signal.