Sorry if the title sucked you in, but this trade really isn't about inflation. At least not primarily. Though KO and other consumer staples would likely do better in an inflationary environment than a lot of stocks would, that's not my rationale here. I do like KO's relative lack of volatility, though.
As always, this trade is a quick flip, making macro factors and fundamentals at best secondary. KO is not a rocket stock. It has barely budged in the last year. But that sideways movement with noise is perfect for this kind of trade. In the last 12 months, KO has thrown off 23 buy signals and those trades are illustrated on the chart. As always, I'm looking for high percentage wins here, not necessarily high percentage gains. So if that's what you're after, go play with NEGG and try not to be holding the stock when the music stops - and it will. My trades are small and boring...and profitable. That adds up to big wins, just a little at a time.
Despite the fact that KO has only risen 1.4% in the entire last year, the 23 trades shown here each produced an average gain of 79 basis points (0.79%) in an average of 5.7 days per trade = .138% per day held. Given that the long term average return for stocks is about .043%/day and over the last 12 months, it's been not quite twice that (.073%/day), these KO trades have doubled a good year for stocks' daily returns and more than tripled the typical daily returns while the stock itself has gone basically nowhere.
But those numbers are a bit misleading. Those KO trade averages are messed up by one really long, almost no return trade from Oct '24 - Feb '25. That trade exists, but it makes "average" not really that indicative of a typical trade. Here are some numbers that do a better job of that.
All 23 trades were profitable. None lost money. 17 of the 23 closed profitably in only 1 or 2 trading days and those that did had an average daily return of .79% - more than 10x the daily rate of return of SPY over the past year as SPY rose over 18%. The median trade returned .42%/day. That means fully half did better than 10x the long term average daily return for stocks.
So you see, KO is a lot sexier than it looks when it is traded this way, so I went long at 69.55. I will add up to 2 more lots tactically if the trade drags out, but will close any lots on the first close that they are profitable. Ideally, though, this will be one of the 74% of KO trades in the past year that closes in one or two days and I will only have to allocate 1 lot of capital to the trade. I do reserve the right to close the trade early (as I did with MPC earlier this week), if I think it's appropriate. I can say that if it opens 2% higher, I'm going to close the trade immediately. But more likely than not, it'll last at least a full trading day.
As always - this is intended as "edutainment" and my perspective on what I am or would be doing, not a recommendation for you to buy or sell. Act accordingly and invest at your own risk. DYOR and only make investments that make good financial sense for you in your current situation.
As always, this trade is a quick flip, making macro factors and fundamentals at best secondary. KO is not a rocket stock. It has barely budged in the last year. But that sideways movement with noise is perfect for this kind of trade. In the last 12 months, KO has thrown off 23 buy signals and those trades are illustrated on the chart. As always, I'm looking for high percentage wins here, not necessarily high percentage gains. So if that's what you're after, go play with NEGG and try not to be holding the stock when the music stops - and it will. My trades are small and boring...and profitable. That adds up to big wins, just a little at a time.
Despite the fact that KO has only risen 1.4% in the entire last year, the 23 trades shown here each produced an average gain of 79 basis points (0.79%) in an average of 5.7 days per trade = .138% per day held. Given that the long term average return for stocks is about .043%/day and over the last 12 months, it's been not quite twice that (.073%/day), these KO trades have doubled a good year for stocks' daily returns and more than tripled the typical daily returns while the stock itself has gone basically nowhere.
But those numbers are a bit misleading. Those KO trade averages are messed up by one really long, almost no return trade from Oct '24 - Feb '25. That trade exists, but it makes "average" not really that indicative of a typical trade. Here are some numbers that do a better job of that.
All 23 trades were profitable. None lost money. 17 of the 23 closed profitably in only 1 or 2 trading days and those that did had an average daily return of .79% - more than 10x the daily rate of return of SPY over the past year as SPY rose over 18%. The median trade returned .42%/day. That means fully half did better than 10x the long term average daily return for stocks.
So you see, KO is a lot sexier than it looks when it is traded this way, so I went long at 69.55. I will add up to 2 more lots tactically if the trade drags out, but will close any lots on the first close that they are profitable. Ideally, though, this will be one of the 74% of KO trades in the past year that closes in one or two days and I will only have to allocate 1 lot of capital to the trade. I do reserve the right to close the trade early (as I did with MPC earlier this week), if I think it's appropriate. I can say that if it opens 2% higher, I'm going to close the trade immediately. But more likely than not, it'll last at least a full trading day.
As always - this is intended as "edutainment" and my perspective on what I am or would be doing, not a recommendation for you to buy or sell. Act accordingly and invest at your own risk. DYOR and only make investments that make good financial sense for you in your current situation.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.