Scalper1 News
The stock market is always a case of, “OK, that was nice, but what have you done for me lately?” IBD’s soft drink group has outperformed both major indexes since the bull market began in March 2009. Going into Wednesday’s market, soft drinks were up 406% vs. 228% for the Nasdaq and 166% for the S&P 500. What, though, has the Beverages-Non-Alcoholic group done for investors lately? Year to date, the soft drink group has retreated 6% — less than the Nasdaq’s 11% drop but about in line with the S&P 500. However, beginning with Feb. 11’s closing lows, soft drinks are back to outperforming (up about 7% vs 4% to 5% for the major indexes). Let’s look at what’s happening among the highly rated soft drink stocks. Dr Pepper Snapple ( DPS ) cleared an 81.55 buy point in strong volume in August, but the stock immediately rolled over and triggered the 8% sell rule. The decline turned into a new pattern. The new pattern featured an entry at 83.67. The stock broke above that in low volume Oct. 9. However, let’s back up a little because this gets tricky. On Oct. 5, the stock retook the previous buy point at 81.55 in volume 37% above average. The previous buy point was probably a more natural area of resistance because that’s where the failure occurred. Individual investors who re-entered on the retake are sitting on a 12% gain — not bad in this market. Dr Pepper currently has shaped a flat base-like structure on top of the prior base; the potential new buy point is 95.36. The stock has a Composite Rating of 96, putting it in the top 4% among all the stocks in IBD’s database. The Composite Rating combines all five IBD ratings into a single number. Coca-Cola ( KO ) is known as one of Warren Buffett’s long-term holdings. Coke is the third-largest holding in the Berkshire Hathaway ( BRKA ) portfolio, making up 13% of assets. The stock has a Composite Rating of 85, which is decent for a conservative blue chip. Coke is working on a flat base with a potential buy point at 44.01. Two other stocks in the group need to do some work on the right side. Monster Beverage ( MNST ) undercut its August low when the stock bottomed Feb. 11. The current consolidation is 30% deep, which is about twice as deep as the market’s recent pullback. For growth stocks, a sell-off fiercer than the major indexes isn’t unusual. Monster has a Composite Rating of 92 but needs to retake its 200-day and 50-day lines. Coca-Cola Bottling ( COKE ) has retaken its 200-day line but remains just under its 50-day line. If a new base develops now, the pattern would be late stage. As a stock climbs, it pause to consolidate or form a new base. Breakouts from the first two stages are more likely to work than those from later stage patterns. The stock’s Composite Rating is a best possible 99. Scalper1 News
Scalper1 News