PEP (Pepsico, Inc.) offered an easy momentum trade on the open.

INTRADAY FUNDAMENTALS

PepsiCo fell 4.3 percent to $63.87 at 9:57 a.m. in New York. The shares rose 1.6 percent last year, while Coca-Cola gained 6.4 percent.

Fourth-quarter net income advanced to $1.42 billion, or 89 cents a share, from $1.37 billion, or 85 cents, a year earlier, PepsiCo said in a separate statement. Excluding some items, profit was $1.15 a share, beating the $1.12 average of analysts’ estimates compiled by Bloomberg.

Sales climbed 11 percent to $20.2 billion. Analysts’ average estimate was $20 billion.

It was gapping down on the open.

64 was a level on our longer term technicals.

On the tape there was a battle at 64.75 and the buyer dropped.  This was a nice short entry. I expected PEP to move away quickly from this price.  It didn’t and did not trade below 65c.

So I thought:

a) maybe PEP is just not ready to trade lower and will be slow to develop

b) if PEP doesn’t trade above 64.75 and then holds below 64.65 I really like that pattern

c) if PEP touches 76c I will get flat.

PEP choose B and this offered an even better entry on the short side below 65c.  Sometimes it takes a stock a little bit of time to develop and for more to pile onto one side.  This happened below 65c.  PEP move nicely away from this price and traded down cleanly to 25c.  Failed there and then found 64 our important technical level.

I stayed with the short as PEP traded below 64.  The market got weaker.  I expected PEP to find much lower ground.  It didn’t.  In fact I tweeted:

smbcapital

PEP

showing relative strength- odd since in an intraday downtrend. below 63.80 will look 2 add 2 short. holds down here will get flat.

no relevant positions