Evening Stars and Beer

• Posted by Greg Harmon
• on February 28th, 2012

The Evening Stars can make for a magical night walking outside under a clear winter sky with a beer in your hand. But Evening Stars in the charts of your beer stocks are not nearly as pleasant. An Evening Star candlestick pattern signals a reversal but many forget that it is a 3 candle pattern, an up day followed by a gap higher and finally a move lower the next day finishing below the mid point of the 1st up day. Looking at the charts of Companhia de Bebidas das Americas, AmBev, $ABV, and Anheuser-Busch InBev, $BUD, shows potential for this pattern to confirm. Take a look.

Companhia de Bebidas das Americas, AmBev, $ABV

AmBev, $ABV, needs to fall and close below 39.74 to confirm the pattern. If it does then look for support in the following days at 39 and 38 followed by 36.90 near the 50 day Simple Moving Average (SMA) and 35.75. But keep in mind that it has very positive technicals. The Relative Strength Index is bullish and rising and the Moving Average Convergence Divergence (MACD) indicator is positive and growing. All the SMA’s are rising and the Bollinger bands are opening higher. It could very easily go sideways or higher still. Wait for the confirmation.

Anheuser-Busch InBev, $BUD

Anheuser-Busch InBev, $BUD, looks very similar. It has a long rising trend, SMA’s heading higher a rising and bullish RSI and a positive MACD. It is in a bit better shape relative to the Bollinger bands, still inside them, but a similar picture. The confirmation for $BUD would be a close under 65.99. From there support lower is found at 65.30 and 64.05, followed by 63, 62.50 and 60.95. But again caution on trying to short it early. It is up over 6% since the last possible Evening Star on February 2.

As a disclosure, I am long $BUD via a bullish Risk Reversal as of this writing.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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