Is Coca-Cola Fizzed Out or Is the Stock About to Pop?

The Coca-Cola Co (KO) was rated a new buy by Citi on Friday with a $68 price target. In full disclosure I generally prefer Coke products at restaurants but I am going to put my biases aside when I look at the charts and technical indicators.

In this daily bar chart of KO, below, I can see a chart that is losing its fizz with lower highs the past 12 months. Prices made lows in March and October. KO is now trading below the negatively sloped 50-day moving average line and the negatively sloped 200-day line. The daily trading volume histogram shows an increase over the past six weeks as prices declined.

This is a sign that traders are voting with their feet. The On-Balance-Volume (OBV) line shows weakness from mid-December. The Moving Average Convergence Divergence (MACD) oscillator is bearish. 

In this weekly Japanese candlestick chart of KO, below, I can see a strong rally in the share price from early 2020 to early 2022. From the high in early 2022 the trend has turned lower. Prices now trade below the declining 40-week moving average line.

The OBV line shows weakness from May as traders became more aggressive sellers. The MACD oscillator is crossing below the zero line now for an outright sell signal.

In this daily Point and Figure chart of KO, below, I can see a downside price target in the $56 area.

In this weekly Point and Figure chart of KO, below, I can see a potential downside price target in the $51 area.

Bottom line strategy: In my 50 years in the securities business I have learned that investors do better when the fundamentals and the technicals – the trends – are on the same page. For now that is not the case with KO. Avoid the long side of KO for now.