Starbucks: More Room for Pullback

SBUX has recently seen further declines before starting to trend higher toward the end of last week. Thus, we are allowing more room for an interim correction. However, given the recent gains, it’s possible that the corresponding low may already be in place. In any case, the correction should clearly wrap up above support at $75.50 in our primary scenario. After that, the larger upward move is expected to break through resistance at $105.72 and reach its final high there. Only then do we anticipate a shift into a new downward phase, likely leading to significantly lower prices. The alternative scenario suggests that the high of the larger upward move was already set at the last major top. This view would be confirmed by a break below support at $75.50 (probability: 34%).