4 Trade Ideas for Coca-Cola: Bonus Idea
Coca-Cola, $KO, consolidated over support the last Quarter of 2021. Then, unlike the broad market, it ran higher to a top in April. It has pulled back from there but continues to show relative strength, bottoming at the 200 day SMA and without even retracing 38.2% of the post pandemic move higher. It comes into the week rising towards resistance, coinciding with the upper of the Bollinger BandsĀ®.Ā
The RSI is rising back into the bullish zone with the MACD crossing to positive as it moves higher. There is resistance at 64.70 and 66.10 then 67.20. Support lower comes at 63.60 and 62.80 then 62 and 61.25. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.73% and has been trading ex-dividend since June 14th. The company is expected to report earnings next on July 26th.Ā
The July options chain sows the biggest open interest at the 60 and 57.50 strikes on the put side and at the 65 strike on the call side. The July 29 expiry chain shows big open interest at the 65 call and an expected move of 5.3% between now and expiry. The August chain shows open interest spread from 62.50 to 50, biggest at 55 on the put side. On the call side open interest is biggest at 65.
Coca-Cola, Ticker: $KO
Trade Idea 1: Buy the stock on a move over 64.75 with a stop at 62.75.
Trade Idea 2: Buy the stock on a move over 64.75 and add a July 29 Expiry 64/60 Put Spread ($1.05) while selling the August 67.50 Calls (85 cents).
Trade Idea 3: Buy the August 65/July 66 Call Diagonal ($1.50) while selling the July 29 Expiry 60 Put (45 cents).
Trade Idea 4: Buy the August 60/65/67.50 Call Spread Risk Reversal (30 cents).
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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the 2nd Quarter in the books, watched equity markets finish the worst start of the year since 1970. They gave back more than half of the previous weekās gain on the week before a decent finish into the long weekend.
Elsewhere look for Gold to continue to consolidate in its pullback while Crude Oil continues in a short term pullback. The US Dollar Index continues in an uptrend while US Treasuries are in a short term move higher in their downtrend. The Shanghai Composite looks to continue its uptrend while Emerging Markets continue to move lower.
The Volatility Index looks to remain elevated but moving lower making the path easier for equity markets to the upside. Their charts still look weak, especially on the longer timeframe. On the shorter timeframe the IWM, the QQQ and the SPY could be making higher lows, the possible start of a short term reversal. Next week will tell. Use this information as you prepare for the coming week and tradāem well.
