Starbucks Stock: A Potion for Profit or a Bitter Brew? Dumbledore's Divination!

A Grim Cup of Coffee?

Ah my dear readers a curious tale unfolds in the Muggle world of finance! Shares of Starbucks (SBUX) that purveyor of caffeinated concoctions have rallied much like a phoenix from the ashes about 20% since early April. But as I always say 'It does not do to dwell on dreams and forget to live,' or in this case forget to analyze the charts! The stock now faces a formidable opponent: the 200 day moving average. A hurdle as daunting as Fluffy guarding the Sorcerer's Stone perhaps?

The Chart's Prophecy: A Temporary Setback?

My crystal ball... I mean our review of the daily and weekly charts foretells a likely pullback. Fear not! This isn't a Voldemort level disaster but rather a pause a moment to gather strength before the 'uptrend phase propels SBUX to even greater heights.' Remember even Dumbledore had moments of doubt but 'happiness can be found even in the darkest of times if one only remembers to turn on the light.' Or in this case turn on the trading volume analysis!

From Peak to Trough: A Rollercoaster Ride

Starbucks you see peaked in early March even after the S&P 500 and Nasdaq 100 had already started their descent. Then like a poorly brewed potion SBUX cratered from around $117 to about $77 in early April. 'Nitwit! Blubber! Oddment! Tweak!' as I often say when faced with such volatility. But take heart for from the depths of despair the stock has begun its ascent.

Volume's Whisper: A Bullish Sign?

Now let's delve into the mystical realm of volume. The On Balance Volume indicator a simple yet insightful tool has broken out to the upside. This my friends suggests that the volume on up days confirms a bullish phase for SBUX. And the Chaikin Money Flow indicator? It shows an 'accumulation' reading since late April. As long as this indicator remains above the zero line the volume supports the uptrend. 'Words are in my not so humble opinion our most inexhaustible source of magic,' and in this case the words of the volume indicators speak of potential growth.

The Cyclical Dance: A Seven Year Waltz

The weekly chart reveals a cyclical pattern with major peaks and valleys every 12 to 18 months. The Percentage Price Oscillator indicator has registered its fourth bullish signal since the 2020 Covid low. In each of the last three instances SBUX has shown a strong uptrend phase. It's like clockwork or perhaps a particularly reliable Time Turner! This pattern suggests we are in for further positive movements despite any short term stalls.

A Prudent Pause or a Prophecy of Profit?

So what does all this mean? 'It means that we face a choice between what is right and what is easy.' In this case the market faces a pause a short term pullback to digest recent gains. But based on my ahem *our* review of the short term and long term charts this pullback could be merely a blip on the radar a pause within a much larger uptrend phase. Invest wisely my friends and remember 'fear of a name increases fear of the thing itself.' So don't fear the pullback but prepare for the potential profit!