Starbucks/SBUX

After ~7 weeks of unrelenting decline, Starbucks/SBUX price now rests immediately north of its 200-day sma (simple moving average), now at ~$49.02. One of two outcomes could occur from this level.

• The 200-day sma stems the decline
• The shares break down beneath the 200-day

Should the former occur, then the shares soon will rise because the ma itself is rising! And should the latter instead occur, then at some moment soon thereafter, the shares will rally back toward the 200-day sma to prove that what once was support now is resistance.

So a purchase at this level can be either profitable or breakeven. Acknowledging the 7 weeks of near straight line decline adds fodder to the argument (at least) for a counter-trend move back toward the 50-day sma.

Whichever event occurs next, the subsequent rally -- toward the 50-day or a break beneath and rally back toward the 200-day -- will offer a significant tell for SBUX in the coming weeks and months. That is, was $64+ a final high (and thus making a statement re future growth) or merely another intermediate term high trade in its continuing long term uptrend?

Investing requires discipline, not hope or lazy thinking. One method to assure making profits consistently is to manage risk. I like my odds at this level: risk = ~$1 and reward = ~$6. Moreover, we should know soon which direction SBUX breaks. In the face of such uncertainty -- and because I believe the long term growth will continue -- I am a buyer of SBUX shares today @ $49.80 or better. I will not pay pay up, and buy at $52, $51, or even $50/share in the ignoble quest for ratification of the pattern.

At this moment, SBUX shares might represent continued risk to decline further, but having patiently bided my time until this moment, it is in truth a calculated risk, arrived at with dispassion.