Starbucks (SBUX) has been in a long and powerful uptrend the past 12 months. Prices are extended on the upside and stretched versus the popular moving averages.
SBUX has not built a top pattern or distribution pattern so I do not anticipate a v-reversal or sudden collapse. Let's look closer at the price action over the past 12 months to see if the roast is done. The stock was mentioned last night on Mad Money as one company Jim Cramer would recommend if the economy slowed.
SBUX has rallied from the $50s into the $90s as the company continues to improve its throughput with technology.
In this daily bar chart of SBUX, below, we can see that prices have climbed steadily higher with only short and shallow reactions or corrections. Prices look a bit extended now versus the rising 50-day moving average line. Prices are about $20 over the rising 200-day line - probably the most extended position in the past 12 months.
Trading volume has been declining since November but the daily On-Balance-Volume (OBV) line has trended higher the past year. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line and pointed higher.
In this weekly bar chart of SBUX, below, we can see a long sideways consolidation pattern followed by an upside breakout and rally. Prices are extended above the rising 40-week moving average line.
The weekly OBV line is very bullish and confirms the price action. The MACD oscillator is also very bullish.
In this Point and Figure chart of SBUX, below, we can see that prices have nearly reached a long-term price target of $91.
Bottom line strategy: The charts above look bullish but they may be getting ahead of themselves. Raise sell stop protection to a close below $83 to lock in gains should prices experience a downward reaction.