Trade Ideas Newsletter 05/05/2016

SBUX is at the beginning of a significant breakdown

Based on the previous analysis in SBUX, traders should ensure that their portfolio can handle increased risk from an additional trade. Also check to make sure that SBUX increases diversification of your current portfolio. Lastly, smart traders check how a new position relates to not just their account, but the current market action as well. For example, take a look at the S&P 500. Is it moving higher or lower? Has it recently moved through a key resistance or support level? Be sure to match up your trading actions on SBUX in relation to the overall market movement.

CHART

Right now the custom sentiment levels, measured by Traders For Wealth, indicate an increasingly negative bias toward SBUX. In addition, the price action in SBUX has been moving down as well. This could be a strong sign of an impending breakdown. Traders should view this as a very bearish trade and make sure it matches up with the overall market, and their current portfolio.

Starbucks Corp (SBUX)

Starbucks Corporation is the roaster, marketer and retailer of specialty coffee. The Company purchases and roasts coffees that it sells, along with coffee, tea and other beverages, and a range of fresh food items, through Company-operated stores. It also sells a range of coffee and tea products and licenses its trademarks through other channels, such as licensed stores, grocery and national foodservice accounts. It operates through four segment: Americas, which includes the United States, Canada, and Latin America; Europe, Middle East, and Africa (EMEA); China/Asia Pacific (CAP), and Channel Development. In addition to its Starbucks Coffee brand, it also sells goods and services under the brands, including Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange and Ethos. Its Americas, EMEA, and CAP segments include both Company-operated and licensed stores. The Americas and EMEA segments include certain foodservice accounts, primarily in Canada and the United Kingdom.