As a consumer non-cyclical stock, Coca Cola Co (NYSE: KO) could in times of market turbulence act as a relative safe haven compared to the rest of the market. Even though this well-managed firm may not be the cheapest in its industry, its great strategic positioning should allow it to trade at a premium. The company recently announced it would raise prices on its drinks around 3 % – 4% to fight rising input costs. That on the margin is positive as it may mean the firm can hang on to its profit margins.
On the weekly chart note the clear uptrend in which Coca Cola Co (NYSE: KO) has been trading over the past 18 months. And more recently the stock has formed a bull flag that could trigger north sometime soon.
On the daily chart we note the divergence of the slow stochastic oscillator versus the price; see the lower lows in price compared to the higher lows in the stochastic oscillator. Such divergence remains my favorite way to use oscillators as it clearly indicates at least a temporary exhaustion of selling/buying. Also note that on June 23rd the stock price came close to touching its 200 day simple moving average but the stock has moved higher since.
Zooming in closer we see the 50 day simple moving average (yellow) looming above, which acted as resistance on June 22nd and also coincides with horizontal resistance (blue line) at roughly $67.
Aggressive traders can open a long position at $65.90 or better with a stop at $64.20 and a first target at $68. More risk-averse traders with a little longer time-horizon may want to wait for a daily close above $67 to initiate a long position and could place stops at $66 with a first target at $69.