Coca-Cola Co. (KO) has been underperforming the broad market this year. We looked at the charts at the end of February, noting that, "The longer KO stays below $45.50-$46.00 the more that the longs above that area are going to feel uncomfortable -- pretty much everyone since early August. Strength above $47 is still needed to improve the chart picture."
KO continued to weaken in March and slipped to new lows again last month. Are prices ready to make a recovery? Let's go back to the charts.
In the daily bar chart of KO, below, we can see that prices recently closed above the flat 50-day moving average line. The share price of KO is still below the declining 200-day line.
The daily On-Balance-Volume (OBV) line peaked in late January and declined to the middle of May telling us that sellers of KO were more aggressive. The OBV line has inched up slightly from that May low.
In the bottom panel we can see a bullish divergence with price momentum making a higher low from February to May while prices made lower lows.
In this weekly chart of KO, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line shows some improvement last month and the Moving Average Convergence Divergence (MACD) oscillator is close to a bullish crossover and cover shorts buy signal.
In this long-term Point and Figure chart of KO, below, we can see an upside price target of $64. A rally to $45 is needed to improve the chart, however.
Bottom line: The correction in the price of KO may be over. Aggressive traders could probe the long side of KO here and toward $42.50 risking below $41.50. Add on a rally above $45 if it develops.