The charts and indicators of PepsiCo, Inc. (PEP) were reviewed in June, where I wrote that, "PEP has moved higher without the benefit of a retest of the May low. The indicators are improving with the price action but a price low without a retest typically makes me nervous. If you recently went long I would use a $99 sell stop. If you have no position then I would be patient and wait for that retest dip."
Good news and bad news. The good news is that PEP never dipped to $99 or retested the May low. The bad news is that PEP never dipped to retest the May low. Buys in early June are doing really well but we did not get a chance to buy a "retest".
Let's check the charts again.
(For more on PEP, see Jim Cramer's Trade Wars and Tariffs May Soon Be Baked Into Pricing.)
In this updated daily bar chart of PEP, below, we can see that prices are above the rising 50-day and the bullish 200-day moving average lines. There is chart resistance above the market from December and January in the $118-$122 area.
The daily On-Balance-Volume (OBV) line has been strongly rising since the middle of May and tells us that buyers of PEP have been more aggressive.
The 12-day price momentum study shows equal highs in June and July which is a bearish divergence when compared to the higher price highs. This divergence suggests that prices could correct a bit in the days ahead.
In this weekly bar chart of PEP, below, we can see some bullish signals since our review last month. Prices have closed above the flat 40-week moving average line.
The weekly OBV line has been moving straight up and signals some strong accumulation.
The weekly MACD oscillator gave a cover shorts buy signal last month and is closer to an outright go long signal.
In this Point and Figure chart of PEP, below, we can see a longer-term bullish price projection of $158.
Bottom line: The price and indicators of PEP have come on strong the past two months. More gains are possible. New longs should look to buy a dip to around $112 if possible. Raise all stops to $107.
(PepsiCo is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells PEP? Learn more now.)
