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Weak

Starbucks Corp. (NASDAQ:SBUX) Under The Microscope

Let me start off by saying that I think Starbucks Corp.(NASDAQ:SBUX) makes a great cup of coffee and provides a very good service. Having said that, I don't like the stock of Starbucks right now.

Today a monthly red Trade Triangle triggered, which is the first monthly Trade Triangle we have had in 14 months. This is a significant technical development and it indicates changes in the picture and direction of Starbucks and should not be ignored.

There is an old adage in trading and it says "they slide faster than they glide". Translated that means stocks go down a lot faster than they go up.

Kudos go out to MarketClub member "QB" who alerted fellow members on the blog today that a red monthly Trade Triangle hit this morning for Starbucks. Thanks, "QB".

This in-depth analysis of Starbucks is not to say the stock is going to collapse. However, I see certain technical elements that are falling in place that do not look good for this stock.

What Does This Company Do?

Starbucks Corporation operates as a roaster, marketer, and retailer of specialty coffee worldwide. Its stores offer coffee and tea beverages, packaged roasted whole bean and ground coffees, single serve products, and juices and bottled water.

Chart Legend & Technical Picture (Black Numbers)

1. Classic long-term trend line.
2. All Trade Triangles are red and negative.
3. Double top and negative divergence (See RSI).
4. RSI Divergence with price action.
5. Break below the 14-month trend line.
6. Fibonacci retracement levels.
7. RSI below its 50 line, which will now act as resistance.

To summarize, I expect the current down trend in Starbucks to continue unless I see otherwise with our Trade Triangle technology.

If I'm are correct in my analysis, I could potentially see Starbucks Corp. (NASDAQ:SBUX) move down to the following Fibonacci retracement levels:
38.2% @ $67.85
50% @ $63.31
61.8% @ $58.77

As a bit of trivia, Starbucks was named after a character in Moby Dick. Starbuck was the first mate on the Pequod.

Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

Comments

  1. Stefan Olinger says:

    I agree with your expectation on the current down trend in Starbucks. Wait for trend reversal indicated with your Trade Triangle technology.

  2. Ray says:

    Great post Adam!

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