The move also comes shortly after Coca-Cola announced a $5.1 billion acquisition of Costa, a U.K.-based coffee chain. While the fast-growing coffee market could boost revenue over the long term, some analysts are concerned that the entry into the food services market could negatively affect Coca-Cola's operating margins. But these developments point to bold moves into new markets that could significantly change the fundamental picture. (For more, see: Coca-Cola May Foray Into Cannabis-Infused Drinks.)
From a technical standpoint, the stock has moved up since the beginning of the month to retest its prior highs at around $46.50. The relative strength index (RSI) has risen near overbought levels with a reading of 64.61, but the moving average convergence divergence (MACD) experienced a bullish crossover above the zero line. These indicators suggest that the stock could see some near-term consolidation, but the medium-term trend remains bullish.
Traders should watch for some consolidation between upper trendline resistance at $46.50 and the 50-day moving average at $45.37. If the stock breaks out from trendline resistance, traders could see a move to R2 resistance at $47.35. If the stock breaks down from the 50-day moving average, it could move lower to test pivot point and trendline support at around $45.90 – although that scenario appears less likely to occur. (For more, see: How Rich Would You Be If You Followed Warren Buffett Into Coca-Cola?)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.