In my book, ” Mean Reversion Trading ,” I share numerous examples of how to identify and execute on mean-reverting stocks. I also always include a major caveat: picture-perfect setups are rare, and even when they materialize, there are never guaranteed winners. That is why trade management is the key to success. Today’s trade on Constellation Brands happens to be one of those rare, textbook examples. With that necessary disclaimer out of the way, practically every single indicator I outline in my book is checking the box right now. Here is the technical breakdown: Relative Strength Index (RSI): STZ has suffered a brutal 17% haircut over the last 23 days, dragging its RSI down near oversold territory. The RSI has been climbing aggressively ever since, setting up a high-probability mean reversion play. Fast MACD (5, 13, 5) : I prefer this faster moving average convergence/divergence setting to catch momentum pivots before the rest of the market wakes up. This indicator fired off a clear bullish crossover on May 15th, adding another critical layer of confirmation to this setup. Directional Movement Index (DMI): The DMI is my go-to for assessing the internal health of a trend. It tracks the DI+ (green line) for buyers and the DI- (red line) for sellers. A downtrend is clearly established when the red line dominates the green. However, when these lines begin to converge and change direction, it provides the very first footprint of a structural trend change. We started seeing exactly this type of curling action on May 13. Catching these aggressive sentiment shifts in real time is incredibly difficult for any human trader. That is exactly why I built Maya, an algorithm grounded entirely in technical analysis with zero emotional bias. Maya is extensively backtested for the last 10 years and has returned near 42% ROI since its launch in April 2025. If stepping back from the screens and utilizing a 100% rules-based system interests you, feel free to check out the details here: https://tradewithmaya.com/autotrading . The trade setup: STZ 145-150 bull call spread To play this catch-up bounce, I am targeting the 145/150 bull call spread. With STZ currently trading right around 147 (sitting perfectly between the strikes), we can get filled on this structure for roughly $2.50. This pricing keeps position sizing effortless. For instance, scaling into a 4-contract position means risking exactly $1,000 to potentially walk away with a matching $1,000 in profit. As long as STZ simply drifts past the $150 mark by the expiration date, this setup allows us to literally double the money risked in just 25 short days. Given how oversold the stock is, combined with the sheer force of the broader market rally, that modest move is highly achievable. Here is my exact trade setup: Buy $145 call, Jun 12 expiry Sell $150 call, Jun 12 expiry Contracts: 1 Cost: $250 Potential Profit: $250 -Nishant Pant Founder: https://tradewithmaya.com/ Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: Nishant Pant has a STZ bull call spread expiring on June 12. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
