Starbucks (SBUX) – Get Free Report has had a mixed run of late.
While the shares boast a one-year gain of 46%, the stock is up just 6.5% so far in 2023. Further, it’s down 8.5% from this month’s high.
The stock’s year-to-date gain slightly lags the S&P 500 and sharply lags the Nasdaq, which are up 7.35% and 18.2%, respectively.
Starbucks stock was trading better coming into this month. Then the coffee-bar giant reported earnings and the shares fell more than 9% in the May 3 session.
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It’s not as if the report was horrible: The company beat earnings and revenue expectations with sales growing 14.5% year over year. But concerns about China seem to have weighed on the stock.
And investors aren’t getting very encouraging news from retailers right now. While TJX Cos. (TJX) – Get Free Report is moving higher on earnings, Target (TGT) – Get Free Report did little to impress investors and Home Depot (HD) – Get Free Report was a disappointment too.
When to Buy the Dip in Starbucks Stock
Daily chart of Starbucks stock.
Chart courtesy of TrendSpider.com
Starbucks shares rallied almost 20% from the mid-March low to the recent high, gaining in five straight weeks.
The post-earnings pullback sent the shares below the 10-day and 21-day moving averages. Starbucks then found support at the 61.8% retracement and the 50-day.
Following a mild bounce — and rejection from the 10-day moving average — the shares are starting to roll over again as we near the post-earnings low at $103.80.
This area is now vital for active bulls and it’s a zone that will likely attract aggressive buyers who are looking for a bounce.
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But I think the bulls ought to use a little caution. If this zone fails to hold as support, it opens the door down to the 78.6% retracement near $100.
If that area fails as support, it puts an attractive risk/reward buying opportunity on the table in the $97 to $98 area. Not only has this zone been strong support, but it’s where we find the 200-day moving average.
For the bulls to regain control of Starbucks, they need the stock to regain the 10-day and 21-day moving average. For the former, that requires only a move over $107.
To regain the 21-day, they’ll need Starbucks to clear $108.50, a level that has also been resistance.
With a move over $110, Starbucks stock could begin to fill the earnings gap. For now, though, keep an eye on $103.50 to $104 on the downside.
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