Tickers in this Article: SAM, ABV, CCU, TAP
After a tight consolidation that has taken place since early November Boston Beer Co. (NYSE:SAM) had a high-volume breakout on Tuesday that propelled it to new all-time highs. This move follows a breakout from a larger base that took place earlier this autumn. SAM has been in a very clear trend higher on longer term charts, and this breakout continues the pattern of higher highs and higher lows. (Read about some brewers that are making a splash this holiday season in Holiday Beers That Won't Break Your Budget.)

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Source: StockCharts.com


While traders would be better served not chasing a 12% breakout, they should pay attention to SAM's peers, as they could move in sympathy. Stocks will often move in unison with their peers as institutions move in and out of the entire group in baskets. This is one way that institutions manage their risk, but it also gives individual traders something they can use to their advantage.

Companhia de Bebidas das Americas (NYSE:ABV) is a stock in this group that has been following a similar pattern to SAM. ABV cleared a consolidation in September and rallied over 30% into late October. It has since settled into a tight consolidation and appears to be attempting a breakout. ABV backed off the initial push to new highs and closed near an important level around $145. Traders should watch to see if this stock can clear this base as it will lead to new all-time highs. (For more, see The Anatomy Of Trading Breakouts.)


Source: StockCharts.com


Much like SAM and ABV, Compania Cervecerias Unidas S.A. (NYSE:CCU) is also at the tail-end of a consolidation just underneath all-time highs. The $60 level has proved to be tough resistance, and it's a level that traders should monitor moving forward. CCU is pulling into its rising 50-day moving average and a trendline marking the most recent pivot lows. These are the two key levels to watch; CCU will likely move in the same direction as its peers.


Source: StockCharts.com


Molson Coors Brewing Company (NYSE:TAP) is also at the tail end of a consolidation, but is still 20% off its all-time highs. While TAP could be considered a laggard based on the performance of its peers, it is hitting new 52-week highs and shows a clear pattern of higher highs and higher lows. Traders should watch to see if it can hold above $50.50.


Source: StockCharts.com


The Bottom Line
When an entire group follows a similar pattern, it hints at institutional participation. Individual traders should always be on alert for when an institution is rotating into or out of a sector. It takes these giants a long time to establish their positions, and traders can benefit from riding the wave of their positioning. The majority of brewing stocks are near all-time highs and in a clear uptrend. This is a great example of how an entire sector can follow a similar pattern. With SAM breaking out, traders can expect many of its peers to follow a similar pattern.

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