Coke's Chart a Messenger of Looming Knockout

After an impressive and steady nearly six-year uptrend, Coca-Cola's stock chart is now displaying classic warning signs of an imminent top. On the daily chart, below, note the loose and sloppy price swings in recent months. This type of action indicates a loud disagreement taking place between buyers and sellers, otherwise known as "violent indecision." Also note the higher highs but lower lows (light blue lines), reinforcing the idea of violent indecision. When this violent indecision occurs after a prior multi-year advance, it typically means the odds of a top are increased dramatically, as sellers slowly regain control of the action away from buyers. With the recent bounce back up to the declining 50-day moving average (darker blue line), Coca-Cola is at a quality short entry area. If we see any weakness down below $41.75 I expect a rollover to fresh lows. A close back over $45 would throw a wrench in the bear thesis. KO, otherwise known as "Knock-Out" due to the ticket symbol, has been the poster child of Warren Buffett's buy-and-hold-forever style, which of course looks fantastic in a grinding, one-way bull market. Every now and then, though, the market strenuously tests those investors to see whether they can withstand the stormy seas. I suspect that time is coming for KO investors in 2015.