Coca-Cola is ready to break out on earnings, says top technician

Investing

Coca-Cola is one of the best-performing Dow stocks over the last year, up 15 percent while the index has risen around 4 percent in the same period. The beverage behemoth has popped 5 percent in the last two weeks, and one top technician expects the rally to continue when it reports earnings this week.

“What I find interesting is that this sell-off [into the Dec. 24 lows] basically comes down and finds support, plus or minus, and comes to life,” Carter Worth, head of technical analysis at Cornerstone Macro, said Friday on CNBC’s “Options Action.”

Since those lows, the stock has jumped nearly 8 percent.

Worth also points out that the shares have bounced off a well-defined upward trend line three times over the last year. In his view that consistent level of support from which the stock continues to rise points toward even more upside in view of Coke’s recent behavior.

Worth’s third and final chart comes in a familiarly bullish shape.

“Finally, if you leave the bottom trend line on and put in a descending upper line, you have the set-up that I think is, ultimately, the breakout,” he said.

“Simple chart, simple breakout bet, earnings coming, and I like Coke long,” Worth said.

Shares of Coke were volatile Monday.

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