PURCHASE, NY – Shares of beverage and snack food giant PepsiCo Inc. (PEP) ended the week on a sour note, closing down
130.85. The decline signals persistent selling pressure that could weigh on the stock as a new trading week begins.
Friday’s trading session was a struggle for the bulls. After an early rally that pushed the stock to a high of $133.06, sellers took firm control. The stock then embarked on a steady decline for the remainder of the day, ultimately hitting a low of $130.59 and closing just pennies above it. This pattern of closing near the session’s low is a classic bearish indicator, suggesting that sellers were active and in command right up to the closing bell.
A glimmer of stability appeared in the after-hours market, where the stock nudged up a marginal 0.061% to $130.93. However, this minor uptick does little to reverse the negative momentum established during regular trading hours.
Outlook for Monday:
The technical picture for PepsiCo suggests caution is warranted heading into Monday. Several factors point to the potential for further downward pressure:
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Weak Close: Ending the day near the intraday low demonstrates a lack of buying interest at lower prices and indicates that the bearish trend could continue.
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Proximity to 52-Week Low: The closing price of $130.85 is hovering uncomfortably close to the stock’s 52-week low of $127.75. A breach of this critical support level could trigger further automated selling and attract short-sellers.
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Failed Rally: The sharp rejection of the morning’s high price shows that any attempt at a recovery was swiftly met with significant selling pressure.
However, a potential counter-argument for the bulls lies in the attractive dividend yield of 4.35%. For income-oriented investors, the stock becomes more appealing as the price falls. This, combined with the approach to the 52-week low, could create a level of support where bargain hunters decide to step in.
Given the strong downward momentum and the weak close, PepsiCo is likely to face a challenging open on Monday, with a higher probability of opening flat to lower. Traders will be closely watching to see if the stock can hold support near its 52-week low, or if the selling pressure will continue to drive it into a new low for the year.
