The rally a few weeks ago, to 70, touched that line, confirming the validity of the line. Have a Base and a Smile Over on the NYSE, there is also another base in the making. It's not a great base, but it is one that is developing and worth noting. The first thing we ought to look at is the long-term chart. Since Coke's fall from 90, it has continually made lower lows on each decline, as well as lower highs.
Higher lows are the first sign that the downtrend is ending.
You can see the downtrend line I've drawn in, dating back to the high at 75 in late '98. It connects several of the rallies Coke has had along the way, and it now sits just overhead, around 63. This trading range KO has been sitting in is getting narrower and narrower, but I am encouraged that there could be a breakout to the upside because on this recent trip down, KO did not bother to come all the way back to the line before moving higher again. That is usually a sign that the buyers are a bit more anxious to buy than the sellers are anxious to sell. Of course, Coke's crossing 63 does not make it shoot ahead because it still has all that resistance overhead, but it does change the trend of the stock from down to up, and that is what we want to see.