Starbucks Corp (NASDAQ: SBUX) Tests Bottom Of Cup Says Market Timer Frank Kollar
December 19, 2006 (FinancialWire) (By Frank Kollar)
Shares of Starbucks Corp (NASDAQ: SBUX) hit new correction lows on Monday reaching almost $20 a share. This is well below lows reached back in 2005 and should shares drop below that level, would take Starbucks down to lows not seen since 2004.
Starbucks may or may not bottom at the $20 level, not because it is a technical support area, though it did mark highs back in 2004, but because it is a round number that traders may cling to as a potential bullish bottom.
No one can know how far down a stock will go until it has reached bottom and started back up. In Starbuck’s case, those who have held on now need almost a 100% gain just to break even. Ask holders of Nortel stock who rode it down from $90 a share to under $1.
Our suggestion would be to consider shorting Starbucks and use the November bottom, around $22 a share, as a stop. If shares break above $22, they are likely on a path to higher highs.
Fibtimer.com (http://www.fibtimer.com) currently has a position in Starbucks Corp in its Stock Timing Strategy.
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
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