The Coca-Cola Co. stock (NYSE: KO) has been trading in a free-fall mode since December 31st, when it hit a nearly 10-month high, at 54.70. Yesterday, the stock hit support slightly above the psychological zone of 50.00 and then, it rebounded somewhat. In our view, the free-fall, and especially the dip below the 52.00 barrier, has turned the short-term outlook to the downside.
If there is no interest at current levels, the stock may fall back below the psychological round figure of 50.00 and initially aim for the low of November 3rd, at 49.00. If that barrier is not able to halt the slide either, then its break may set the stage for extensions towards the 47.35 zone, defined as a support by the lows of October 29th and 30th.
Taking a look at our short-term oscillators, we see that the RSI, although below 30, has started to turn up, while the MACD lies below both its zero and trigger lines. Both indicators detect strong downside speed, but the fact that the RSI shows signs of bottoming suggests that there is likely some more recovery before the resumption of the fall, perhaps for the stock to test the 51.10 zone as a resistance this time.
In order to abandon the bearish case, we would like to see a potential recovery extending above 52.00. Such a move may encourage market participants to aim for 52.90 zone, marked by an intraday swing high formed on January 4th, the break of which may allow advances towards the peak of December 31st, at 54.70.
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