Stock of the day: Coca-Cola

The first two trading days in October were really successful on the global stock markets but the third day brings us a correction. In today’s analysis a company, which didn’t really use the last two days and was unable to perform a spectacular growth, remains in bearish territory – Coca-Cola (KO).

Here on a long-term chart, we do have a big Head and Shoulders pattern (yellow), which is the main trigger of a bearish sentiment here. The drop in September broke two crucial supports, a long-term black up trendline and a red neckline of the H&S formation (and that actually activated that pattern).

At the end of September, sellers even managed to break the horizontal support on 57.5 USD (blue), which was a confirmation of pessimism. Yesterday’s session was important in that KO tested the blue area as a resistance and bounced off it creating a daily candle with a long head. My view on KO is negative and will remain that way as long as the price stays below the blue area. The price coming above the blue area and a red neckline would cancel the sell signal and trigger a buy signal, but chances for that happening are now rather limited.