Transcription
Hi, this is Kri Arac with Wicked Stocks, bringing you an individual stock pick in Coca-Cola Company, symbol KO. I did record this video on Wednesday, January 8th, 2025.
Let's take a look at the basic fundamentals, courtesy of Yahoo Finance. Definitely a Fortune 500 company, market capitalization of $264 billion roughly, average daily trading volume over the last 3 months around 16 million. I'll let you study this more if you want a freeze frame, but I'm going to jump to the chart—the weekly chart. This chart goes back about 10 years. I'm going to open it up just a bit to show you this former channel top that we settled above earlier in '23. 6070 is the channel top, dropping a nickel a week, and it is bottom-picking territory. 6070 can absorb selling through the first quarter. This is, after all, roughly a three-year channel structure—a three-year channel structure able to contain selling on a 3-month basis roughly, and possibly longer as time goes by. It also lines up pretty well with this old high back in February of 2020, a high of 6013. That's actually kind of a 1% mark; it's actually just above a 1% violation threshold.
So I like the idea of buying 6070. If you've got a 1% stop-loss on buying 6070, you know that would come down to 6010, as you can see here. That lines up obviously quite well with 6013, the February 2020 high. Buying 6070 in anticipation of upward continuation, possibly all the way back to the 7353 high in the coming months. Of course, this is not a real high-volatility stock; this is more of an investment portfolio buy and hold.
Now, if you're reluctant to buy on weakness, as buying 6070 obviously would be, you could await, after having tested that long-term support, a settlement above this newly formed descending channel top at 6452. Also, 3 to 5 week swing traders could make good use of buying 6070 and holding out for 6452. That channel top is dropping a dime a week; next week, of course, it'll be 6442, etc., etc. It is a formation that can contain weekly, possibly monthly, buying pressures. From there, the market then is susceptible to falling back to 6070, but certainly not guaranteed to do so. So if you're a near-term swing trader, you can buy 6070, sell 6452, short in anticipation then of bearish rotation potentially back to 6070.
Now, if we were to close above 6452, that is the buy signal on strength that I would recommend following—a buy opportunity on weakness. Some don't like to buy, you know, new lows, which this is, following the September high. So, you know, bottom-picking 6070, let's wait for the market to stabilize and turn higher. Turning higher would be indicated with this settlement above 6452, and then I think you can buy it more aggressively, perhaps in anticipation of another $10 move roughly to 7353. I suppose that would be about a $9 move. And so, you know, that is the 7353 high; does fit the, you know, the 20% move criteria that we use. And I do think a retest of that 7353 high is likely later in '25. The question is, you know, how soon will that be? That is next to impossible. But I will say a more accelerated rally should unfold with a settlement above 6452.
In any event, if we rally into the lower 70s over the next 3 to 5 months, let's say, following the purchasing of 6070, dropping a nickel a week, that could be an area to take profits, and maybe take all profits on a nice 20% roughly move following the testing of 6070. Downside, if we do close this week, Friday, January 10th, at 6010 or lower—in other words, a 1% violation of that 6070 long-term three-year channel top—that would be an indication to exit this trade altogether. And once again, if you if you like playing both sides of the market, if you're comfortable playing the short side of the market, even if that might mean, for instance, a reaching for out-of-the-money puts, those out-of-the-money puts could be 55, 57, 60 strike roughly. Out-of-the-money puts, I would call that probably a 2 to 3 month move. If we close below the 6070 channel top by that full 1% margin of 6010 or lower within 2 to 3 months, we should fall into the mid-50s, at 55 even. Channel bottom is actually probably more significant, or at least as significant, as the 6070 channel top. So this is very stairstep. Long-term traders, long-term funds, I think are probably, you know, bottom-picking the low 60s, as I say, in anticipation of recovery in the coming months back into the low 70s and perhaps even higher. And if we close below 6070 by a full 1% margin, bearish continuation to 55 even, where the next attempt at a longer-term low can be made.
So if you were to sell short, if you were to buy 55 strike out-of-the-money puts on a settlement of 6010 or lower, I would go 6 months out on that expiration price. And inversely, you know, let's say that to the upside, if you're bottom-picking 6070, that might mean reaching for, I don't know, 72 strike out-of-the-money calls that don't expire. I think that's more of a 3 to 5 month move perhaps; I would go the better part of a year out on that expiration if you're disinclined to buy the stock itself and you just like trading the options. And one other thing that I'm going to say is really a repeat of what I already have, and that is that if we close above the 6452 channel top, I don't expect continued repeat testing of 6070, but rather odds would favor bullish continuation, sustained recovery back to the 7353 September high of last year. I'm going to leave it at that for this particular Wicked Stocks video analysis on Coca-Cola Company. You have a great day.