PepsiCo, Inc is a multinational snack and beverage company.

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Some notable products include Pepsi Cola, Fristo-Lay, Gatorade, Quaker and Tropicana. Its vast selection of products and strong branding is key for it to be the second-largest food and beverage company in the world in terms of net revenue and market capitalization. Pepsi Co (PEP) is listed on Nasdaq and is a component of Nasdaq 100 and S&P 500 under Consumer Staples.

PEP was in a clear up trend prior to Dec 2021. The price up swing came to a halt on 16 Dec 2021 in a manner similar to Wyckoff buying climax (BC) at $169, followed by a shallow retrace with a spike of volume on 17 Dec. The price then attempted to upthrust the resistance of $169 but was unable to commit above. The reaction on 24 Jan 2022 with rejection tail behaves more like Wyckoff change of character. The price showed sign of weakness and slowly drifted down to test the bottom of the range. The price subsequently was moving in this range of $153 and $169 in the next few months.

The price finally found some support on 11 Mar around $150. It then launched into a steady sign of strength (SOS) rally but did another Wyckoff upthrust with localized increase in volume. This suggests there is a presence of supply. And the big spread bar on 18 May wiped out 50% of the gain from the previous sign of strength rally. More weakness is expected ahead.

The price dropped to test the low of $153 on 14 June. The subsequent sign of strength rally was followed by a shallow pull back in mid July. The breakout on 28 July was significant as the follow through price action was further up swing. Between late June and 24 August, the volume was relatively lower compared to earlier phases. Coupled with the up moves, it would suggest an exhaustion of supply and further confirm the price is moving in the Wyckoff accumulation phase. The bar on 16 Sept is also a sign of hidden bullishness where the big spike of volume did not cause the price to drop suggesting presence of demand.

More notably, the price started forming higher lows and launched into a rapid sign of strength rally in mid October with earning results as catalyst. It broke $169 with strength and continued until resistance at $182.50. The price subsequently retraced and formed a new smaller range between $175.50 and $182.50. This range currently exhibits characteristics of Wyckoff back up (BU). The 16 Dec spike of volume is likely another sign of presence of demand.

Bias

Bullish. According to the Wyckoff trading method, the price is likely to attempt another break out of the back up to begin a phase E mark up. A good long entry would be around $182.50 above the upper back up range.

If the price breaks below $178, it may retest between $169 and $172.50 range.

The bullish trend in PEP suggests market rotation from growth stocks to value stocks. The excessive volatility in the market makes it hard to find winning stocks. It is essential to be flexible to adopt the method to suit the market condition in order to pick these winning stocks.

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