Crosshatching the Charts: SMI in Focus For Pepsico Inc (PEP) – Wagner Review

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Pepsico Inc (PEP)’s Stochastic Momentum Index is cruising higher and has passed the key level of +40, indicating possible oversold territory.  The SMI indicator was developed by William Blau ad presented in Technical Analysis of Stocks & Commodities magazine in 1993, ten years after the original stochastic was invented.  The oscillator fluctuates between -100 and 100, and as such the indicator can be readily used to identify overbought and oversold levels. Readings above +40 occur when the market is trading near the top of its recent price range. Readings below -40 occur when the market is trading near the bottom of its recent price range.

Investors looking to secure stock market profits may be tweaking an existing strategy or looking to devise a brand new one. As the stock market keeps charging higher, investors will have to figure out how they want to play the next few months. Identifying market tops and possible correction levels may be very tricky. With the markets trading at current levels, the situation for the average investor may be widely varied. Some investors will be trading with a shorter-term plan, while others may be focused on a longer-term investment time frame. There are many financial professionals who are predicting a sharp reversal in the stock market, but there are also those who believe that the upswing will keep pushing stocks higher over the coming months. Investors will need to decide for themselves which way they think the momentum is going to swing and prepare accordingly.       

Investors are taking another look at shares of Pepsico Inc (PEP). The Relative Strength Index (RSI) is one of multiple popular technical indicators created by J. Welles Wilder. Wilder introduced RSI in his book “New Concepts in Technical Trading Systems” which was published in 1978. RSI measures the magnitude and velocity of directional price movements. The data is represented graphically by fluctuating between a value of 0 and 100. The indicator is computed by using the average losses and gains of a stock over a certain time period. RSI can be used to help spot overbought or oversold conditions. An RSI reading over 70 would be considered overbought, and a reading under 30 would indicate oversold conditions. A level of 50 would indicate neutral market momentum. Viewing the Relative Strength Index, the 14-day RSI is presently standing at 68.83, the 7-day is 73.59, and the 3-day is resting at 73.02.

Currently, the 14-day ADX for Pepsico Inc (PEP) is sitting at 28.79. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend.

Investors have the ability to use technical indicators when completing stock research. At the time of writing, Pepsico Inc (PEP) has a 14-day Commodity Channel Index (CCI) of 104.44. Developed by Donald Lambert, the CCI is a versatile tool that may be used to help spot an emerging trend or provide warning of extreme conditions. In terms of Moving Averages, the 7-day is resting at 132.26. Moving averages have the ability to be used as a powerful indicator for technical stock analysis. Interested traders may be keeping an eye on the Williams Percent Range or Williams %R. Williams %R is a popular technical indicator created by Larry Williams to help identify overbought and oversold situations. Pepsico Inc (PEP)’s Williams Percent Range or 14 day Williams %R currently sits at -19.95. In general, if the indicator goes above -20, the stock may be considered overbought. Alternately, if the indicator goes below -80, this may point to the stock being oversold.

Investors looking to secure stock market profits may be tweaking an existing strategy or looking to devise a brand new one. As the stock market keeps charging higher, investors will have to figure out how they want to play the next few months. Identifying market tops and possible correction levels may be very tricky. With the markets trading at current levels, the situation for the average investor may be widely varied. Some investors will be trading with a shorter-term plan, while others may be focused on a longer-term investment time frame. There are many financial professionals who are predicting a sharp reversal in the stock market, but there are also those who believe that the upswing will keep pushing stocks higher over the coming months. Investors will need to decide for themselves which way they think the momentum is going to swing and prepare accordingly.     

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