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. That makes Coke stock a great buy for almost any market.
And as the charts show, Coca-Cola stock is a particularly good buy right now.
Coke recently announced it would raise prices on its drinks around 3 % to 4% to fight rising input costs. That on the whole is positive for investors, 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 vs. 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.
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Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.
