Thursday, August 12, 2010

KO Watch

The Coca-Cola Co. (KO) is on a slide with signals. Concern that the downturn in China will cause Chinese people to drink fewer Cokes? Who knows? The main point of interest in this chart is that KO has a significant ways to go before enountering major support.

KO $55.65

The decline began yesterday and is continuing today. The stock is trading around 3% below Monday's swing high.

The parabolic sar, Person's Proprietary Signal (pps) the macd and the fast stochast have all swung into bear phase over the past few days.

China's growth appear to be slowing, and that's a big market for China. Also, KO was also blocked by the government from buying a Chinese fruit juice maker, limiting growth opportunities in that huge market.

So there are sound reasons for the stock to drop, and that meant a volume spike yesterday when the decline began.

The stock rose near term from a swing low of $49.47 on July 1 to Monday's high of $57.40. Longer term, KO has been trending downward since December 2009, which was a lower high in a larger downtrend dating back to the peak in the 1990s.

On the Person's chart, KO is trading below the primary lower pivot and has touched the secondary pivot.

Person's Table
ppspps openupper pivotlower pivot
KO $55.65 $28.24 aug11 $57.14 +2.7% $55.26 -0.7%

Reversal Levels
  • $57.40, +3.1% (swing high)
  • $ <== You are here.
  • $55.21, -0.8% (20-day moving average)
  • $53.60, -3.7% (200-day ma)
  • $49.47, -11.1% (swing low)
Bottom line: I like KO as a near-term bear play on a persistant break below the 20-day simple moving average. Longer term, I tend to be bullish on KO, for fundamental reasons. It's a 2-million pound gorilla that with a long-estalished global marketplace. What's not to like about that?  

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.

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