Stock of the day: Starbucks
01 August 2023
As the trading session nears its start today, all eyes are on Starbucks, awaiting its quarterly earnings release. The expected figures paint a somewhat optimistic picture, with an EPS forecasted at $0.95 and revenues anticipated to be around $9.21 billion. However, the numbers alone don't tell the entire story. The release, scheduled for post-session, comes at a time when Starbucks' stock is exhibiting some intriguing technical patterns.
Currently, ahead of its earnings, Starbucks' stock performance can be described as lukewarm at best. Analyzing the daily chart reveals a couple of significant insights. Firstly, the stock price has slipped beneath a long-term uptrend line, illustrated with a distinctive purple hue. This downward trajectory has caused concern among some technical analysts, hinting at potential further declines.
Even more striking is the emergence of a head and shoulders pattern. This classic technical indicator is often seen as a harbinger of a trend reversal. Presently, the stock price appears to be carving out the right shoulder of this pattern, making its next moves pivotal.
The upcoming earnings report can be the catalyst to determine the direction Starbucks takes. If the figures fall short of expectations, it could send the stock spiraling downwards, potentially aiming for the blue neckline. Should this line be breached, it's a strong indication for traders to adopt a bearish stance on Starbucks in the long run.
Conversely, an earnings beat could rejuvenate Starbucks' stock. A surge in buying might propel the stock towards the yellow horizontal resistance. Penetrating this barrier would be perceived as a medium-term bullish signal. Yet, for long-term investors, the real litmus test remains the purple uptrend line. Only when the stock can reclaim its position above this line can they truly breathe a sigh of relief.