To The Moon

Hi everyone! Today we’ll look at a coffeehouse chain that everyone knows:

Starbucks Corporation (NASDAQ: SBUX)

SBUX has been holding this pink trendline since the GFC in 2008, and forming a series of higher highs and higher lows. Recently, the stock has been consolidating in what appears to be a common occurrence in recent times - a symmetrical triangle consolidation pattern with lower highs and higher lows.

The stock moved from 70.35 to 115.48 from May 2022 to May 2023, forming a lower high in the wider pattern. It has since retraced about 50% of its move up, and is currently consolidating around the 92-93 area.

Something incredibly interesting in SBUX’s chart is that you can see smaller consolidations within a larger consolidation pattern:

Note the main consolidation (red), the medium-term consolidation (orange), and the short-term consolidation (blue, post-ER consolidation). There’s a long way to go for SBUX to be able to break out from the wider pattern, but it is pretty evident that institutions want to trap bulls during this accumulation phase before sending the stock a lot higher.

For now, there are unfilled gaps at 102 and between 107-108. These gaps are likely to induce profit-taking and some selling, forming a tradeable dip. Ignoring the short-term volatility, in the longer-term, we can expect SBUX to retest 115.48 once it breaks out of the main consolidation pattern, and eventually ATHs above 126.32.

In the event that SBUX were to break down of the steepening ascending trendline (red), I expect it to push down towards the upside gap at 85.47, followed by the long-term trendline tap (pink), if we get there. Otherwise, look long.

Sentiment: BUY

Summary (with Price Targets - NFA):

• Symmetrical triangle consolidation pattern with a short-term measured move to 108.12 and a long-term target of ATHs above 126.32. A breakdown would see a retest of 85.47.

• Investors can consider accumulating shares at current levels down to 90.52 (if we get a break down). I would only reconsider long positions if SBUX makes a lower low below the long-term 2009 trendline. Otherwise, averaging down is a viable strategy.

Alright, that’s it for this newsletter. Till the next one!

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