Coffee retailing giant Starbucks Corporation (SBUX) has traded in an almost freakishly orderly up-trend since the early 2009 lows in the broader market.  In late 2011 and early 2012 the stock went vertical and traded above this longer-term trend, but eventually gave way to the laws of physics and corrected 30% in roughly 3 months, developing a solid bottom in early August 2012, right at the bottom end of the longer-term up-trend.

Since the latest rally off he August 2012 lows the stock has again reached the upper end of the longer standing channel and currently only roughly 6.00% away from all time highs set in April 2012.

Closer up on the daily charts Starbucks Corporation (SBUX) continues to develop consolidation patterns that have a high probability of resolving to the upside.  To be exact, the stock is currently flashing a so called bullish pennant formation, which as the name suggests would resolve to the upside upon a break out of the pattern.  The level to overcome is near $59 and a break above there could work up to the all time highs near $62 for roughly a 5.00% move.  On the flip side, a break below $56.50 would be weak and a sign that more consolidation is needed before the stock can try re-testing the all-time highs.

While the near-term setup has a bullish tone, it also has a marginally lower probability of working higher in the intermediate term given that the stock is already trading at the high end of its longer-term uptrend.

If and when Starbucks Corporation (SBUX) manages to re-test its all-time highs near $62, the next question will be whether it can resume the up-trend past the all-time highs.  Long-term holders of the stock are fully aware that it hasn’t move higher since April 2012 yet are hoping for the 2009 – 2012 ascent to continue.  How the stock reacts upon a successful retest of the highs will speak volumes as to how long it could take for the longer-term trend to continue higher.  Ideally however some churning near the re-test levels of $62 will eventually lead the stock to a clear breakout higher.

 

 

 

 

 

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