This is part three of a three-part series on break-outs to all time highs. Today I feature Coca-Cola ( KO
). I learned 40 years ago there are four phases in a stock's movement. (1) a sideways move, or a base; (2) the up trend; (3) the topping formation, and (4) the decline. KO
had been in a base for over a year, with a double top
near $45. Would KO
have a breakout, or fake-out? As KO
approached $41 at impulse leg D, I could see an IMPERFECT bullish
XABCD pattern. At the same time the Aroon
indicator had gone positive ( Aroon
are very similar), with green over red indicating a change to a positive trend. I went long on KO
at $43 in late January, purchasing deep in the money call options for August. My first upside projection is to Fibonacci 1.272 ($47.26), or Fibonacci 1.618 ($49.02). (My decision to hold or sell will be the action of the stock and indicator readings). So far KO
has steadily been marching higher. And, the trend is your friend, right?
I think I will close for today, and I will go and enjoy a Diet-Coke. Yours for better trading, Don.