SBUX Watch

The King of the Latté, Starbucks Corp. (SBUX) has moved into bull phase on the macd, but with an unusual degree of ambiguity on that most unambiguous of signals.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SBUX $26.54

At 1:57 p.m. Eastern

The macd signals bull or bear when it crosses the zero line on a chart, so it tends to be as clear as the a stoplight at the interesection.

In the case of SBUX, however, there are -- issues.

First, the macd has been giving a series of short-term phase switches. Normally, a macd signal has persistance. The most recent bear phase lasted 12 trading days, the bull phase before that, four days, bear phase five days, bull phase 10 days -- you get the picture.

The price has mirrored that whippiness by moving mainly sideways on the three-month chart, at two levels separated by an earnings announcement leap.

Second, the slow moving average on the macd has dropped nearly down to the zero line. A cross below would be hugely bearish. It has dropped and turned up today. But it's so near as to consistute a risk factor for technical traders who go by the book.

More broadly, SBUX has been in an uptrend since hitting $7.06 on Nov. 21, 2008. Since then it has risen nearly 300%. Not a bad move, all in all.

Reversal Levels

• $27.93, +5.1%
• $26.57 <== You are here.
• $24.07, -13.9%

The current choppiness make SBUX a risky directional trade for the short term. For the long term, it's a good long-term bull play in my book, especially if the price breaks above $28.

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Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

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Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.