I recommended a neutral stance on coffee giant Starbucks Corp (SBUX) back on November 17 and Wednesday Jefferies cut their fundamental rating on SBUX to "hold" from "buy".
Let's brew a fresh pot and check out the charts again.
In this daily bar chart of SBUX, below, I can see that prices stalled out around $105 in early December and are pulling back. SBUX dipped towards the rising 50-day moving average line earlier on Wednesday but we might see a stronger test of the moving average line in the days ahead. The slope of the 200-day moving average line is positive.
The On-Balance-Volume (OBV) line made a nice move up from May but has slipped lower so far in December. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profit sell signal.
In this weekly Japanese candlestick chart of SBUX, below, I can see a top reversal pattern at the end of November and beginning of December. Prices are showing some weakness but remain above the rising 40-week moving average line.
The weekly OBV line is showing some softness in December after a rise from May. The MACD oscillator is above the zero line but narrowing which means the "trend strength" is weakening.
In this daily Point and Figure chart of SBUX, below, I can see that prices reached a downside price target of $97.
In this weekly Point and Figure chart of SBUX, below, an upside price target of $152 is shown but prices are in a down column of "O's".
Bottom line strategy: Some analysts are bullish on SBUX because China is loosening Covid restrictions and the company has big expansion plans there. This news is well known and may be discounted already and that something else is needed as a trigger for further gains. I would continue to take a cautious stance on SBUX.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
