Pepsi Is Ready to Bubble Higher

 | Jun 13, 2017 | 9:30 AM EDT
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Stock quotes in this article:

pep

We last looked at Pepsico (PEP) on June 1 where we concluded that, "If PEP can pull back to nearby support in the $114-$112 area I think it is worth buying risking a close below $111."

Looking in again on PEP this morning, we can see that PEP has pulled back to $116, short of the top end of our $114-$112 suggested buying zone. It's nice when a forecast works out, but I never forget something I learned years ago: "Calling the market is easy. Getting it to answer is hard."

Let's look at the indicators to see if we need to raise our bids.

In this updated daily bar chart of PEP, above, we can see that prices remain in a positive trajectory. PEP is above the still-rising 50-day simple moving average line. The 200-day moving average line is also still positive.

The movement in the On-Balance-Volume (OBV) line has matched the zigs and zags of prices, which helps to confirm the advance since January. The trend-following Moving Average Convergence Divergence (MACD) oscillator recently crossed to the downside above the zero line for a take profits sell signal.

In this weekly bar chart of PEP, above, we can see that prices are pointed up and so are our favorite indicators. PEP is above the rising 40-week moving average line. The weekly OBV line has a positive slope for much of the past three years and the MACD oscillator is clearly above the zero line.

In this Point and Figure chart of PEP, above, we can see the breakout at $108 and a possible/tentative upside price target of $126.

Bottom line: PEP may not dip as much as we would like, so traders could either buy PEP around $116 and/or go long on a close above $118. Risk a close below $113 for now.

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