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While other large-cap names were thriving off their April lows, shares of PepsiCo (PEP) actually made a new 52-week low in May. This week, the beverage and snack heavyweight completed an upside rotation, pushing above its 200-day moving average for the first time since October. Today we’ll dig into the dynamics of this impressive turnaround story, show how a much larger rotation could be taking place, and identify key levels to watch to confirm further bullish breakouts. After achieving a series of new 52-week lows in April and May, PEP stabilized around the $127 level with a series of lows into late June. An initial push higher was accelerated after their July earnings release, bringing a fresh test of the 200-day moving average. After a brief pullback to the 21-day exponential moving average, Pepsi finally pushed above the 200-day as well as a major trendline connecting the October 2024 and March 2025 price peaks. The rally in Q1 stalled out just below the 200-day moving average, confirming a lack of upside momentum as the RSI failed to get much above the 60 level. On this latest upswing, the RSI pushed well above 60 and has remained above 50 since the end of June. This improved momentum situation suggests plenty of fuel for continued gains above current levels. Applying a Fibonacci framework to the daily chart, we can see that the recent test of the 200-day moving average also represented a 61.8% retracement of the March to May downtrend phase (pink lines). The July swing high was also right around a 38.2% retracement of a much larger downtrend, from the summer 2024 highs to the May 2025 low (green lines). This week’s rally has now pushed PepsiCo above both of these Fibonacci retracement levels, indicated with an orange shaded area on the chart. If the current uptrend phase continues in the coming weeks, we’d look for an upside objective in the $156-$158 range, represented by the blue shaded area. This price zone is derived from 61.8% retracement of the long-term Fibonacci framework, and would also mean a 100% retracement of the March to May downtrend. When trying to better understand the context of a particular price move, I was taught, “When in doubt, zoom out.” With that mantra in mind, we’re now looking at a monthly chart for PEP going back to 2005. The last time Pepsi saw a pullback of this magnitude was during the Great Financial Crisis. After the eventual low in 2009, a bullish crossover from the monthly PPO indicator confirmed a new uptrend phase that essentially lasted until the 2023 peak. While a similar bullish signal may not guarantee the same extended bullish run for Pepsi, the PPO indicator could confirm an “all clear” of sorts for this consumer staples heavyweight. All long-term uptrends begin with short-term breakouts, and the recent upswing above the 200-day moving average could be a sign of much greater gains in store for Pepsi. David Keller, CMT marketmisbehavior.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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