Because a company is a household name doesn’t make it immune to market declines. Coca-Cola stock fell from ~$60 to as low as $36 a share in roughly a month during the 2020 Coronavirus crash. That is about 40% decline, fortunately for the bulls, was followed by a recovery to approximately $55 by the end of the year.
Is this a good time to join Coca-cola bulls? The daily chart above makes it possible to analyze KO’s structure from its $60.09 top from an Elliott Wave perspective. The sharp decline to $36.20 can be seen as a five-wave impulse, labeled 1-2-3-4-5 in wave (A). The EW theory states that a three-wave correction follows every impulse, before the price resume in the direction of the impulse.
Another 40% Plunge Threatens Coca Cola Investors That three-wave correction fit in for the advance from March 2020 low. The corrective rally in Coca-Cola stock looks like a triple zigzag, labeled as W-X-Y-X-Z. If this count is correct, the bearish reversal from $54.92 high is the beginning of wave (C) down. (C)-waves usually breach the ending point of the corresponding wave (A). This means bearish targets below $36 a share are highly probable as long as the price stays below wave (B) high.
Besides, the stock has broken out of major correction trendline and made a short-term impulse-corrective cycle, labeled 1-2. Just like there was a massive sell-off in wave 3 during the COVID-19 plunge, it makes a lot more sense for the price to go down rapidly the same way in wave 3 of (C).
In my opinion, there are plenty of reasons to prepare for a drop to the low $36 in the months ahead. What's your view on Coca-cola? Let me know in the comment. Thanks for reading! Veejahbee.
After testing out a few Calls on #KO over the last two weeks, I've watched its movements like a hawk there is something weighing it down.
It hasn't really made to many jumps up in price when it does make a jump the market is pulling it right back down and more the volatility is on a down trend.
Normally soon as I sell a option it goes the reverse, so I got two more for further out dates.
I have two ending tomorrow I've been getting my feet wet there was a few days I could of cashed out for a good profit but I wanted to see the price move with something on the line.
Knowing that i could of made good money on this play is good lesson learned when I bought the two more contracts further out I should at lease bought one PUT to see how it moved.
Live and learn but I love to learn thank you for your post here it made me think of a few other things.
chamcmichael
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Ko is a dividend stock there is just no way it drops below 40 again without a crash. I still hope you are right to some degree just so i can buy the dip.
schery0581
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In my opinion you might be right if High at 2 is validate, However the Low at X and the low at 1 is still intact until than price could resume and move higher. Gann pattern could be in motion too.
It hasn't really made to many jumps up in price when it does make a jump the market is pulling it right back down and more the volatility is on a down trend.
Normally soon as I sell a option it goes the reverse, so I got two more for further out dates.
I have two ending tomorrow I've been getting my feet wet there was a few days I could of cashed out for a good profit but I wanted to see the price move with something on the line.
Knowing that i could of made good money on this play is good lesson learned when I bought the two more contracts further out I should at lease bought one PUT to see how it moved.
Live and learn but I love to learn thank you for your post here it made me think of a few other things.