Account

New to ADSS? Open an
account now to get started.

OR

Already have an account?

Add funds to your ADSS account

Account

New to ADSS? Open an
account now to get started.

Add funds to your ADSS account

Trends & Analysis
News

Gold closes week higher on rate cut speculations

News

Week Ahead Preview: 20th of May

News

Walmart’s stock hits record high on Q1 results

News

Crude oil rises on US supplies, inflation data

News

Another nice quarter for NVIDIA?

News

Alibaba delivers earnings miss, shares slide

Trends & Analysis
News

Gold closes week higher on rate cut speculations

News

Week Ahead Preview: 20th of May

News

Walmart’s stock hits record high on Q1 results

News

Crude oil rises on US supplies, inflation data

News

Another nice quarter for NVIDIA?

News

Alibaba delivers earnings miss, shares slide

Asset Watch

Buy Starbucks for a short-term trade?

Tuesday May 14, 2024

Investors have roasted Starbucks over the last 12 months, as the coffee giant has declined by 34% from its May 2023 highs. After its same-store sales sank and the company cut its 2024 guidance on Apr. 30, CEO Laxman Narasimhan said:

“In a highly challenged environment, this quarter’s results do not reflect the power of our brand, our capabilities, or the opportunities ahead. It did not meet our expectations, but we understand the specific challenges and opportunities immediately in front of us.”

But with historical setbacks providing solid buying opportunities, could a short-term rally be in the cards?

Supporting the bull case, Starbucks’ weekly RSI (the blue line at the bottom) hit 27 two weeks ago. Outside the Covid-19 crash, it was the lowest reading since the 2008 global financial crisis, so as a result, the stock was extremely oversold. With the metric ending last week at 32, the recent rally could have more room to run.

While the stock bounced off support near the previous lows (the $71 area), weekly resistance is near $82. The level is close to the November 2019 lows, the June 2020 highs, the March 2022 lows, the May to June 2022 highs, and the August to November 2022 lows. As such, a rally back to the $82 area represents about an 8% upside from the May 10 close and could offer a solid risk-reward given the stock’s recent suffering.

Likewise, a similar event occurred in 2022, where the stock collapsed below $70, then rallied back above $81, and then corrected again.

So, can Starbucks find some short-term strength, or is another sell-off on the horizon?


Site by Pink Green
© ADSS 2024


Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

ADS Securities LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.

ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.