PepsiCo Inc. ( PEP) is the Stock of the Day at Real Money here on Thursday after the beverage and snack food giant posted better-than-anticipated earnings and revenue figures for the third quarter. PEP was trading up about 2% in pre-market activity Thursday but it closed weak on Wednesday. Let's check the charts and indicators for PepsiCo, which is a holding of Jim Cramer's Action Alerts PLUS charitable trust.
In this daily bar chart of PEP, below, we can see that prices closed below the September lows of PEP, putting all the recent buyers under water. Prices are close to a test of the rising 50-day moving average line but still nicely above the bullish 200-day line. The On-Balance-Volume (OBV) line made a lower high in September than June even though prices moved to a new high; this is a bearish divergence and suggests the bulls have become less enthusiastic. The Moving Average Convergence Divergence (MACD) is still pointed down from September in a take profits mode.
In this weekly bar chart of PEP, below, we can see that prices traded in a large sideways pattern for over two years before the breakout and rally this year. PEP is above the rising 40-week moving average line and the weekly OBV line is pointed up. The MACD oscillator is poised to turn up or down depending on the price action in the weeks ahead.
In this Point and Figure chart of PEP, below, we can see that the software is projecting a tentative upside price target of $157. A trade at $139.38 will refresh the uptrend and a trade down at $128.71 will weaken the picture.
Bottom line strategy: PEP needs to show us independent strength here on Thursday and in the days ahead. Stocks can get dragged down by the broad market's movements, so it is important for investors to push PEP up to a new high.
