Starbucks - A Long Term Cup of Joe

You are looking at a WEEKLY chart of SBUX             . Starbucks             recently split the stock 2 for 1. The stock ran up into that split and is now digesting all that action. It has been lower for the last 3 weeks. But I expect SBUX             will soon resume its trek higher.

In late 2008 and early 2009, SBUX             put it a Double Bottom . In early 2009, SBUX             began going higher. It has never looked back and is still acting strong.

August of 2010 was a good indication that UT 1 was intact. In October of 2012, after a six month downtrend, SBUX             touched UT 1 and began UT 2.

I included the red downtrend lines just to make a point . When the price of a stock closes above a downtrend line, it may be the right time to try going long. If you want to short a stock, you can try going short when the price closes below an uptrend line.

The first red downtrend line I spoke about above was 6 months long. The second red downtrend line was also about 6 months long. The third red downtrend line (DT) has lasted 3 weeks so far. I can't tell you how long it will last but I will wait for a sign that SBUX             is ready to go higher before I jump in. I feel obligated to say I am not willing to short at this point either. One hint into my own guidance for my own investments is that it looks as though SBUX             may put in an "inside week" this week. It will take more time for the signal to be confirmed one way or the other.

Let's talk about the dashed line I labeled the "Accelerated Uptrend". It is above UT 3 and is acting like an uptrend line all by itself with no relation to the solid line Uptrend Lines. If I were in SBUX             at the moment, I would be watching this dashed line very closely. If SBUX             closes below the dashed line I would sell some and try to buy back at UT 3. If you get stopped out on your repurchase at UT3, try again at UT 2.

On the other hand, if SBUX             closes above the DT line, it should be safe to try going long or adding to an existing position. Use a comfortable stop and keep an eye on the chart.
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