PepsiCo. (PEP) has recently rallied back to the underside of its declining 200-day moving average line. Is this the time to buy or to sell? Let's review our indicators and charts to see if the answers we want will be revealed.
Our own Jim Cramer said this about PEP last night on "Mad Money" - "Investors should circle back to PepsiCo, which is doing great, has a solid buyback and a 3.4% dividend yield."
In this daily bar chart of PEP, below, we can see some "interesting" developments. Prices look like they are outlining some large base pattern - perhaps an inverse head and shoulders.
Prices sagged from September into October and that upset the pattern a little until you look at the On-Balance-Volume (OBV) line. The OBV line shows a modest decline the past few weeks so I think the idea of a "right shoulder" is still "in play".
The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside from below the zero line for a cover shorts buy signal.
In this weekly bar chart of PEP, below, we can see that the slope of the 40-week moving average line is down. Prices are currently below the line but that could change quickly.
The weekly OBV line shows a strong rise from May to July and then a sideways trend. This suggests that there was strong buying and that those longs have largely stayed.
The weekly MACD oscillator is showing a take profits cross to the downside and could turn up or down from here depending on the coming price trends.
In this Point and Figure chart of PEP, below, we can see a nearby price target of $102. A rally to $117.69 will be bullish, however.
Bottom line strategy: Traders can risk below $104, can probe the long side of PEP here, or buy strength above $117.69.