Jim Cramer told his Mad Money viewers Tuesday night that the markets often get it wrong, especially during earnings season. But the good news is, it's easy to figure out what's working. Just look for what sold off last time, but managed to bounce right back.
This pattern can be seen with Constellation Brands (STZ) . Investors shunned the stock in 2020, believing Constellation was merely a restaurant play that couldn't survive with shuttered restaurants. But Constellation re-emerged as a stay-at-home stock with sales that were better than ever.
Let's get a couple of wine glasses and check out the charts.
We last looked at STZ on Jan. 8 and wrote that, "Traders should look for a pullback towards $220 as a chance to go long risking to $200. $300 is the price objective." Traders got their opportunity to buy by the end of January.
In the daily bar chart of STZ, below, we can see that the shares have rallied to new highs. STZ is above the rising 50-day moving average line and above the positively sloped 200-day average.
The On-Balance-Volume (OBV) line has made a new high to confirm and support the new price highs. The Moving Average Convergence Divergence (MACD) oscillator just turned to the upside for a new outright go long signal.
In this weekly bar chart of STZ, below, we can see that prices are pushing and hopefully through the 2018 highs. Prices are above the rising 40-week moving average line.
The weekly OBV line is inching up the past three months. The MACD oscillator is bullish.
In this Point and Figure chart of STZ, below, we used daily price data. Prices just made a new high for the move up and a $300 price target is shown.
Bottom-line strategy: STZ is in an uptrend and we want to trade it from the long side. Continue to hold longs from previous recommendations. Raise stops to $215. The $300 area is our next price objective.