Skip to main content
Publish date:

Constellation Brands After Earnings: Here's the Must-Hold Support Level

Constellation Brands stock is sitting on a key support level after the earnings report. Here's what's next.

Stocks on Wednesday fell at the open but are off the lows as the indexes remain volatile. 

Constellation Brands  (STZ) - Get Constellation Brands, Inc. Class A Report is roughly flat on the day. Still, that’s better than this morning. The shares dipped in the premarket trading session.

That’s as the company missed on its second-quarter earnings estimates, although revenue beat expectations. Its full-year earnings outlook came in ahead of analysts’ expectations, too. 

Remember, Constellation Brands has a big stake in cannabis firm Canopy Growth  (CGC) - Get Canopy Growth Corporation Report, which has been under pressure lately and is at one-year lows. A rebound in the stock could drive Constellation Brands stock higher.

On the flip side, should Canopy continue to underperform, it could weigh down Constellation Brands.

Let’s look at the must-hold support level Constellation Brands currently faces.

Trading Constellation Brands Stock

Daily chart of Constellation Brands stock.

Daily chart of Constellation Brands stock.

From the fourth quarter of 2020 through the second quarter of 2021, Constellation Brands constantly found resistance near the $240 area.

TheStreet Recommends

After one final attempt to break out in early June, the stock was rejected and began its slide. Once it lost the 50-day moving average, this measure became active resistance.

It didn’t take long to lose the 200-day moving average next.

But Constellation Brands continues to hold the $208 to $210 area as support. This was the pre-Covid March 2020 high. During the initial plunge, Constellation Brands, like many other stocks, fell hard.

Once it rebounded and broke back over this high, it turned into support. That’s very important for the bulls.

From here, the stock is bouncing around its 10-day and 21-day moving averages, suggesting some indecision among traders. But the situation becomes much clearer in two scenarios.

The first is a breakout over the 50-day moving average — active resistance. Above that opens the door to $222, followed by the 200-day moving average.

In the other scenario, the stock must hold the $208 level. If it breaks, it puts the $200 mark in play. Below that and the $187 gap-fill fill area and the monthly VWAP measure may be next.

In short, see that Constellation Brands holds $208. If it doesn’t lose this mark after reporting earnings, it may not lose it all. 

However, bulls can’t gain momentum with the stock stuck below active resistance, so the shares must eventually clear the 50-day moving average to go on a sustainable rally.