Starbucks Corp. engages in the production, marketing, and retailing of specialty coffee. It operates through the following segments: North America, International, and Channel Development.
Take a look at the 6-month chart of Starbucks (SBUX) below with the added notations:
Chart of SBUX provided by TradingView
Over the past few weeks, SBUX has created a key level of support at the $84.5 (blue) mark, which would also be the “neckline” for the stock’s bearish head and shoulders (H&S) topping pattern. Above the neckline you can see the H&S pattern (red) has been completed.
Confirmation of the H&S would occur if SBUX were to break the support, and that break happened on Friday.
The Tale of the Tape: SBUX has confirmed a head & shoulders pattern. A short trade could be made at or near the prior neckline, with a protective stop set above that level.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key…
Good luck!
Christian Tharp, CMT
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Source: Wealthpop