The stock price of Starbucks Corporation (SBUX) is overbought on its daily bar chart and the weekly bar chart. SBUX has surpassed its price targets on a daily Point and Figure and a weekly chart.
There is an upside price gap on the daily bar chart (below), which could be a bearish exhaustion gap if it is filled soon. Let's drill down on the charts to see the risks and rewards of owning SBUX now.
In this daily bar chart of SBUX, below, we can see that prices are well above the rising 50-day moving average line -- more than $10 above the average and the widest point on this chart.
Prices are, of course, above the rising 200-day line and the widest point in the past year. In the lower panel we can see that prices are consider "overbought" using the slow stochastic indicator (readings above 80% or 85% are generally considered overbought or extended).
In this weekly bar chart of SBUX, below, we can see that prices have just about doubled in the past 12 months. Prices are extended above the rising 40-week moving average line and the weekly slow stochastic is overbought.
In this Point and Figure chart of SBUX, below, we can see that prices have exceeded the Point and Figure price targets (both on a daily and weekly chart).
Bottom line strategy: Being overbought and extended and beyond price targets are not in themselves sell signals, however, they make a stock sensitive and potentially vulnerable to any disappointment. If SBUX declined to fill its price gap from last week I would consider it an exhaustion gap and that would be a sell signal to me.