Pepsi Consolidates Ahead of Earnings

Published on Wednesday, 08 February 2012 16:58 Written by David Becker

New York, February 8^th (TradersHuddle.com) – Pepsi (NYSE: PEP) is schedule to announce its earnings before the bell on Thursday February 9, 2012.  After Coke's solid report, investors are is expecting to post a profit of $1.13 per share, up 7.6 percent from a year ago when Pepsi reported earnings of $1.05 per share, according to analysts.  Revenue is projected to come in at $19.92 billion for the quarter, 9.7 percent above the year-earlier total of $18.16 billion.

Pepsi stock price is pushing up against resistance levels near 67, but has been unable to break through during the past 2-months.  During January, the 50-day moving average crossed above the 200-day moving average, which is generally a sign that a bull trend is in place.  Support on PEP is seen near the 20-day moving average at 66, and then the 50-day moving average near 65.50.

The relative strength index remains near the 55 level, which is considered neutral, as the stock has remained in a consolidative range.  Volume has also decline and is now above the 50-day moving average of volume.

The MACD (moving average convergence/divergence index) is hovering around the zero line, reflecting a market that is consolidating.  The $3 dollar defined range that PEP has created during the last 8-weeks, has sapped momentum from this stock that can be quickly cured with unexpected earnings.  A break to the upside will likely continue on a close above 67.25.  This will allow the recent crossover of the spread (12-day, 26-day) and the 9-day moving average to expand and draw investors into the stock.