Wednesday, July 14, 2010

SBUX Watch

You could call it the bouncing of the bulls. Starbucks Corp. (SBUX), the coffee dudes, on the sixth trading day of an uptrend hit the 20-day simple moving average, overshot by a smidgen, and then rebounded. Someone needs to give those beasts a grande Pike Place Roast.
SBUX $26.00

Adding interest to the chart, today's failed move also marked the transition of the macd into bull phase. The other indicators have been there for a few days.

SBUX announces earnings on July 21, after the close, and the recent volatility sets up a possible surprise play. The average trading range is 3%, which qualifies (barely) under my rules for trading earnings surprises. My chosen vehicle (at this point) would be a straddle composed of the Oct $26 calls and puts, for a $3.55 debit.

Support and resistance are widely spaced, giving the stock lots of room to move.

On the three month chart, SBUX has been trading sideways, between around $28 and $24, with the current price midway in that range. So the stock can be played as swing trades, with 9%+ on the upside and a similar amount to the downside. Not too shabby at all.

Reversal Levels
  • $28.50, +9.6%
  • $27.08, +4.2%
  • $26.00 <== You are here.
  • $23.47, -9.7%

The Great Reflation: How Investors Can Profit From the New World of Money
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we reemerge from the wreckage.

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.
  • 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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