Book Profits On PepsiCo

Inc (PEP)
traded to an all-time intraday high of $149.27 on Wednesday, June 16. This was a test of its weekly risky level at $149.26. After setting this high, the stock closed below its June 15 low of $148.07. This is known as a daily key reversal.

Another reason to book profits comes from its weekly chart. Pepsi has a positive but overbought weekly chart with its weekly slow stochastic reading above 90.00, as an inflating parabolic bubble.

PepsiCo is a diversified food and beverage company. It merged with Frito-Lay in 1965, bought Tropicana Products in 1998 and Quaker Oats in 2001, which included the Gatorade brand for athletes. Helping to drive the stock to this week’s high was coronavirus buying as consumers bought consumer staples products. This demand has waned as the economy opens up again.

The daily chart for PepsiCo:

Courtesy of Refinitiv XENITH

So far in 2021, PepsiCo had a correction of 13.7% from a high of $148.77 on Dec. 29 to $128.32 on March 4. From this low the stock rallied by 16.3% to its all-time intraday high of $149.27 set on June 16. The high was a test of this week’s risky level at $149.26.

Note that June 16 was a key reversal day. After setting the high the stock closed below its June 15 low of $148.07.

The horizontal line at the top of the chart is the quarterly risky level at $150.13. The monthly value level for June is $144.30. A move below this level indicates risk to the 200-day simple moving average at $140.84 and its semiannual value level at $140.06.

The weekly chart for PepsiCo:

Courtesy of Refinitiv XENITH

The weekly chart for PepsiCo is positive but overbought. The stock is above its five-week modified moving average at $146.05 with its 12x3x3 weekly slow stochastic reading at 89.90, falling below the 90.00 level. When it was above 90 lost week it was in an inflating parabolic bubble formation.

A weekly close below the five-week MMA with the stochastic reading falling below 80.00, the weekly chart will become negative.

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