Taking Profits
Daily Charts with 50EMA and Volume
(*Above price before the stock split)
(*Above price after the stock split)
With the ER approaching (4/23/15 after close) quickly here, we felt that this was a good level to close most of our positions on Starbucks (SBUX) yesterday morning. We’ve been holding our call-positions since late-December so it’s been a good position-trading almost last 4-months. Starbucks did not perform as well as our Boston Scientific (BSX) positions (another position we held for about 4-months), but still it was very good trade with satisfying gain.
I still do think Starbucks look bullish in the intermediate and primary term, but we do have some weakness signal that could slow things down here. Again, with ER approaching next week, I am not sure how well it will move until then. I think the best strategy here is to wait until after the fact.
Cautionary Signal
Daily Chart with MACD
It’s interesting to see that the similar bearish divergence we are seeing on this stock as well as Boston Scientific. Again, I do not think this is a “signal” to short but to be cautious. Many times, this bearish divergence appears when the buying-momentum slowly dissipates (exhausting the buyers); and the cause of it might be multiple reasons. Could be because the ER is coming and the investors/traders are taking some profits here. Another reason might be that this stock has rallied since late-October of last year, and the investors/traders are slowly taking positions out anticipating certain pullback.
Whatever reason might be, we felt very comfortable closing most of our positions here and wait it out until after the ER. If there is any kind of pullback, I would watch daily-50EMA ($46ish) and if that level is lost, probably daily-100SMA ($43ish) is where its headed. As of today, it’s tough to presume that we are going to have the pullback since we are still in an uptrend in the intermediate-term. $46-level is probably the level to watch for the next possible support.
