We reviewed Coca-Cola Co. (KO) earlier this month, noting that "Traders who followed our recommendation in June to go long should hold and raise sell-stop protection to just below $44.50. Add to longs above $47 looking for gains to the $56 area in the next few months."
KO has not rallied above $47 -- and now it is close to our suggested stop-loss of just below $44.50. With analysts trying to make sense of what the announcement of the purchase of Costa, now Britain's biggest coffee chain, does for the bottom line, our recommendation could get stopped out. Let's look again.
In this daily bar chart of KO, below, we can see that the price has weakened in the past two weeks, with a close yesterday below the rising 50-day moving average line. KO is still above the flat 200-day line, but that could get broken in September.
The daily On-Balance-Volume (OBV) line has slipped lower in the past two weeks -- telling me that sellers of KO have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is nearly down to the zero line and a possible outright-sell signal.
In this weekly bar chart of KO, below, we can imagine that prices are testing the flat 40-week moving average line. The weekly OBV line shows a small crest in buying and the MACD oscillator on this longer timeframe has begun to narrow towards a take-profits crossover.
In this Point and Figure chart of KO, below, we can see a down column of "O's," but also an upside price target of $56.56. It remains to be see if support from around $44.38 develops.
Bottom line strategy: Maintain sell stops below $44.50. If we take a loss, we will put it behind us and look for other opportunities. If KO reverses to the upside, I will exhale.