The Cola Wars are Heating Up
- Posted by Greg Harmon
- on August 8th, 2012
The war between Coca Cola, $KO, and Pepsi, $PEP, has been going on for over 20 years in their minds. Recently it has morphed into the bottled water space. So how do they stack up now? Lets check out the charts.
Coca Cola, $KO
Coca Cola, $KO, has had a long run higher from the March breakout at 68. With a series of pullbacks along the way to the 50 day Simple Moving Average (SMA), it is heading that way again now. It may hold support in the bull flag at 79, but the 50 SMA is the next support lower. The 3-box reversal Point and Figure (PnF) chart shows a price objective met at 80, confirming the upward momentum diminished. A hold at the 50 day SMA at 76.88 or the 100 day SMA at 75.37 lower would be a good entry.
Pepsi, $PEP, has lagged $KO, waiting until May to start a move higher. since then it has had a long run higher with a few pullbacks along the way. It is holding at resistance a bit better than $KO with a strong and bullish Relative Strength Index (RSI) and a Moving Average Convergence Divergence indicator (MACD) that is positive. All of the SMA are rising. The PnF for this name has a price objective of 80 as well, but that is still 7.50 higher than the current price.
Both stocks are looking a bit vulnerable currently in their uptrends, but this round of the Cola Wars goes to Pepsi. Look towards the pullback in Coca Cola as an entry point or look at the pairs trade long Pepsi against short Coke until then.
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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.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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