In his first Executive Decision segment of last Friday's "Mad Money" program, host Jim Cramer spoke with Bill Newlands, president and CEO of Constellation Brands (STZ) , and Donae Burston, founder of La Fete du Rose,
La Fete du Rose is one of the first companies to receive support from Constellation's new minority-owned venture capital program. Newlands said women and minorities are not well-represented in the wine and spirits business, and Constellation hopes to start changing that. Burston said it's very hard for small brands to break into the industry, but with Constellation's help they have a shot.
Let's check and see if investors have a shot with the charts of STZ.
In this daily bar chart of STZ, below, we can see that prices turned higher in early November, quickly rallying above the 50-day and 200-day moving averages and eventually turning their slopes positive. The On-Balance-Volume (OBV) line turned upward in November and then turned sideways in the middle of February, suggesting a more balanced approach by traders. The Moving Average Convergence Divergence (MACD) oscillator gave us a buy signal in November but it has been weakening with lower highs from December, telling us that the strength of the uptrend is weakening.
In this weekly Japanese candlestick chart of STZ, below, we can see a large bottom pattern playing out over the past three years. Prices are above the rising 40-week moving average line. The latest weekly candle shows a nice lower shadow, telling us that traders are rejecting the lows. The weekly OBV line shows a long sideways pattern and a strengthening trend from November. The MACD oscillator is above the zero line in positive territory but the two moving average lines are on top of each other, so we could soon see a turn up or a turn down. Stay tuned.
In this daily Point and Figure chart of STZ, below, we can see that the software is projecting an upside price target in the $295 area.
In this weekly close-only Point and Figure chart of STZ, below, we can see a potential $306 price target.
Bottom line strategy: In our review of the charts of STZ back on April 9 we wrote, "Thursday's downside price gap will keep me on the sidelines a bit longer." Prices had little follow-through selling and soon resumed the uptrend. Aggressive traders could return to the buy side on STZ, risking to $221. The $295-$306 area is our price target.