PepsiCo Inc. (PEP) is the Stock of the Day here at Real Money, with its shares trading higher before Tuesday's opening bell in reaction to better-than-anticipated second-quarter numbers. Let's check out the charts and indicators to see what has changed since our June 4 review of the charts, when we wrote, "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."
In this updated daily bar chart of PEP, below, we can see that prices have remained firm the past month and above the rising 50-day moving average line. The daily On-Balance-Volume (OBV) line declined a little in June as some traders may have liquidated long positions ahead of the earnings report. The Moving Average Convergence Divergence (MACD) oscillator recently has narrowed and soon could cross to the upside for a fresh outright go long signal.
In this weekly bar chart of PEP, below, we can see a positive picture with prices above the rising 40-week moving average line. The weekly OBV line is making a pause in an uptrend and the MACD oscillator still in a positive mode.
In this updated Point and Figure chart of PEP, below, we now have a potential longer-term price target of $190.
Bottom line strategy: PEP is indicated to open higher Tuesday and we could see a new high close for the move up. Stop protection could be raised to $127 now as we look for $176 and perhaps $190 in the months ahead.
