PepsiCo, Inc. (PEP) was favored by Jim Cramer in the Lightning Round of Mad Money Monday night. Let's check the charts and indicators of this popular beverage company.
In the daily bar chart of PEP, below, we can see two trends -- a sideways consolidation pattern from July to December followed by an uptrend from January to now. Prices are above the rising 50-day moving average line and the rising or upward sloping 200-day line.
The daily On-Balance-Volume (OBV) line shows a generally positive trend the past twelve months but the line has diverged slightly in recent weeks as prices have made new highs and the OBV line has not.
In the lower panel of this chart is the 12-day price momentum indicator. Momentum has been making lower highs from late March while prices made higher highs. This tells us that price momentum has been slowing and when compared to price we have a bearish divergence. A bearish divergence can foreshadow a correction or even a decline.
In the weekly bar chart of PEP, below, we can see a long sideways consolidation pattern and a newer uptrend. Prices are above the rising 40-week average and the weekly OBV line is in an uptrend too.
The weekly MACD oscillator is above the zero line in bullish territory but it has been narrowing and could signal a take profits sell in the weeks ahead.
In this Point and Figure chart of PEP, below, we only show the price action and reversals. Here a bullish price target of $176 is being projected.
Bottom-line strategy: Some bearish divergences have raised their "head" but they might not stop this uptrend. If long PEP raise your sell stop to a close below $124 and we may still reach the Point and Figure chart of $176.
