Starbucks Corp. (SBUX) gets a lot of press attention - some bad but much of it good. SBUX is scheduled to report fourth-quarter earnings after the closing bell on Thursday, and fundamental analysts will be looking over the numbers for things like same-store sales for the U.S. and overseas growth and the cost of goods and labor.
I imagine that Bill Ackman will be eyeing the numbers too. Bill Ackman and his Pershing Square Capital hedge fund bought 15.2 million shares of SBUX recently.
In this daily bar chart of SBUX, below, we can see some interesting price moves. In June we can see how prices plunged quickly from $58 to $48. After this quick downside washout we have seen prices trend higher the past four months.
Prices are back above the rising 50-day moving average line and above the bottoming 200-day line.
The volume pattern since July does not look like volume is expanding on the rally but the daily On-Balance-Volume (OBV) line does indeed go up from early August showing aggressive buying.
The daily 12-day price momentum indicator in the lower panel show higher highs from August and it does not divergence from the price action.
In this weekly bar chart of SBUX, below, we can see that prices have moved in a large downward drifting channel the past three years. Chart resistance can be seen in the $60-$65 area. Prices have crossed above and below the 40-week moving average line several times in the past three years.
Currently SBUX is above the bearish 40-week line.
The weekly OBV line shows a similar downward channel movement the past three years. The OBV line has crawled higher the past four months but it has not broken out of its longer-term bearish pattern.
The Moving Average Convergence Divergence (MACD) oscillator just crossed to the upside for an outright go long signal. A cover shorts buy signal can be seen in August.
In this Point and Figure chart of SBUX, below, we can see a triple top pattern at $59.23. Trades above $59.82 or $60.42 would be bullish but meanwhile a downside price target of $51.67 is being projected.
Bottom line strategy: SBUX has traded higher from late June and it looks like a possible rising wedge formation except that volume has not diminished through the pattern. The risk of a rising wedge pattern is that it is inherently weak because volume has been absent. When a rising wedge pattern breaks to the downside one can typically see prices retrace most or all of the pattern in short order. I cannot say with certainty this is a rising wedge but I would sip carefully.