Starbucks Corp. (SBUX) has been drifting lower the past few weeks. Is this the start of a deeper pullback or should we be looking to buy this spot of weakness?
Let's check out the charts and indicators.
In the daily bar chart of SBUX, below, we can see how prices have been correcting the steep rally of early November. Prices are still above the rising 50-day moving average line and the slower-to-react 200-day moving average line.
The daily On-Balance-Volume (OBV) line has weakening since early November telling me that sellers have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside last month for a take profits sell signal.
In the weekly bar chart of SBUX, below, we can see that prices are holding onto the gains of October/November. SBUX is above the rising 40-week moving average line.
The weekly OBV line has been moving up, irregularly, from June and the MACD oscillator, which is well above the zero line, has started to narrow.
In this Point and Figure chart of SBUX, below, we can see a small downside price target of $61.80 being projected.
Bottom-line strategy: Short-term traders should avoid the long side of SBUX for the near-term as a pullback to the $62-$61.50 area is possible. Intermediate to longer-term traders should wait for a rally above $68 as their signal to go long.