Shares of coffee giant Starbucks (SBUX) gapped higher Friday on the heels of the Seattle-based company's earnings and revenue beat Thursday night, along with price target bumps by a number of sell-side fundamental analysts.
Let's check out the charts to see what size cup we may want to order.
In the daily bar chart of SBUX, below, we can see a gap higher and the shares challenging the September peaks. Prices are off their early highs but it is a long way to the close Friday. The shares are above the improving 50-day and 200-day moving average lines.
The On-Balance-Volume (OBV) line made a low in May and continues to point to more aggressive buying. SBUX's OBV line could soon make a new high to confirm the price gains.
The Moving Average Convergence Divergence (MACD) oscillator is hugging the zero line so it will be easy for a turn higher or lower from here.
In the weekly Japanese candlestick chart of SBUX, below, we do not have the latest candlestick pattern plotted. We can imagine a long white real body for this week. Prices will be above the bottoming 40-week moving average line.
The weekly OBV line is up from May and needs to resume the rise this month. The MACD oscillator is just below the zero line and just short of an outright buy signal.
In this daily Point and Figure chart of SBUX, below, we can see Friday's rally with no gap because of the kind of chart here. Prices reached $93 and we need a trade at $94 to refresh the uptrend and make a clear breakout. Nevertheless, the chart shows us that the $113 area is a potential price target.
In this weekly Point and Figure chart of SBUX, below, we see a $113 price target.
Bottom-line strategy: In
our October 21 review we were bearish on shares of SBUX. If the trading volume of SBUX does not really expand Friday the risk is that prices pull back again. I am taking a wait and see approach for now.
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