While the S & P 500 and Nasdaq 100 remain languishing below their 200-day moving average, shares of Coca-Cola Co. (KO) are close to completing a bullish price pattern which suggest much further upside potential. The daily chart of KO displays a fairly straightforward “cup with handle” pattern, formed by a long rounded bottoming pattern followed by a short-term pullback. The key to this pattern is that the rim of the cup as well as the handle are all around the same price level. In this case, each of those points have hit in the $73-74 range. This bullish pattern is only completed if and when the price breaks above the rim of the cup, which would suggest a minimum upside target around $85. We can arrive at this upside objective by measuring the height of the pattern and then adding that amount to the breakout level around $74. As we wait for KO to complete this bullish pattern resolution, we have to note one concerning element in the form of weakening momentum. The recent swing highs have been marked by a lower RSI, forming a bearish momentum divergence. So the price action in the handle has demonstrated weaker momentum. A breakout with stronger RSI levels would erase this divergence and confirm the upside price target. On the weekly chart, we can observe a buy signal from the PPO indicator in early February. As KO bounced off its 150-week moving average, this bullish PPO signal confirmed a new accumulation phase which propelled the stock to up its current retest of all-time highs. The previous rally phase came after a PPO buy signal soon after the October 2023 low around $52. At the end of this rally phase, the RSI pushed into the overbought region which suggests a potential exhaustion point. Then in September and October 2024, the RSI came out of the overbought region just before a PPO sell signal. A similar pattern in 2025 could indicate an end to the current bullish phase, but neither signal is evident at this point. So is this bullish configuration for Coca-Cola part of a larger accumulation phase for beverage stocks? To the contrary, a quick review of the technical setup for KO versus PepsiCo, Inc. (PEP) shows that these two competitors have experienced a vastly different 2025. While KO is testing its previous all-time high, PEP is making a new 52-week low. There could be a number of reasons for this divergence, from Coca-Cola’s greater exposure outside the United States, to PepsiCo’s portfolio of brands that include snack foods, to a generally stronger fundamental profile for KO. In the end, the charts don’t tell us why there’s a divergence between the stocks, but they definitely suggest that Coca Cola is demonstrating a much stronger technical position going into May 2025. -David Keller, CMT marketmisbehavior.com DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
