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.