Close to Key Levels - PepsiCo

Published on Tuesday, 31 August 2010 04:40 Written by Danny Miller

New York, August 31st (TradersHuddle.com) - Shares of PepsiCo, Inc. (NYSE:PEP) closed the trading session at $63.60 near its 50 day and 200 day moving averages currently set at $64.07 and $63.52 respectively. PepsiCo's price action is above the 200 day moving average but below its 50 day moving average, signaling a possible break out.

PepsiCo, Inc. (NYSE:PEP) operates worldwide beverage, snack and food businesses. The Company manufacture or uses contract manufacturers, market and sell a variety of grain-based snacks, carbonated and non-carbonated beverages. Some of the products offered are Cheetos, Tostitos tortilla chips, Ruffles potato chips, SunChips multigrain snacks. The beverages unit sells beverage concentrates, fountain syrups, and finished goods under the Pepsi, Mountain Dew, Gatorade, 7UP, and Sierra Mist names among others.

PepsiCo price action seems to be setting up for a tight range between the 200 day moving average as support and the 50 day moving average serving as resistance.

A tiered approach to enter the stock, appears to be the best way to maximize possible movements from the stock, as traders could enter PepsiCo with a small position and wait for the stock to break out above the 50 day moving average at $64.07, where traders could add to their position as momentum builds with the breakout. The flip side will be if support being referenced at the 200 day moving average set at $63.52 breaks it could mean further downside in the horizon for PepsiCo.