Perk up!

I keep thinking about this comment (quoted yesterday, and below)...
"SBUX is a good short up to 52.49. If the stock is able to cross that line then cover and move on to other chances. I say it loses its steam and fails and the lows get lower. That much is clear if you examine its pattern of trade. Now it is a timely short with little risk. Little risk because the position is controlled by a stop that will be followed. It’s a simple play."
... and not solely because one of us will be wrong. That is a fact of life when investing. Let's examine the chart(s) of Starbucks/SBUX. First, is its chart post-IPO. (The chart commences price bars ~3-4 months after the IPO.)

To me, this chart has the appearance of a long-term winner. Yes, the trend identified (#1) is accelereated, and yes the sub-trend (#3) is a blow-off high, but there is nothing within the subsequent area pattern (ellipsoid #2) that has the appearance of a top; in fact, it appears to be a base. Let's zoom in...

The arrows pinpoint the validity of trend lines 1 and 2. Because there are now 2 declining trend lines, these trend lines are part of a bullish fan formation that is arguably 2/3 complete. Note during yesterday's trading activity,
1) The bullish gap,
2) The low trade is above trend line 2. (And has remained above it, at least so far.)
3) The volume bar.

Big volume and an up price with internal pattern breakouts during a nasty day for the market -- impressive. Note also that lows A & B are 2/3 of a potential double bottom, which require a trade (preferably, a close) above point C ($56.90) to confirm the pattern; call the breakout as $57 to include PnF analysis. Assuming a bullish resolution, the 200-day simple moving average (sma) will provide resistance, but only temporarily; the price lingers now under that indicator. (Moving averages are of little use in a sideways-trending market, which is the sum of SBUX's pattern the past 9 1/2 months.)

I would expect (again, assuming the bullish resolution) that fan line #3 would have data points above current prices (~$52) but below the all-time highs (~$65); ~$57 would be one good data point.

Again, assuming the bullish resolution, Starbucks/SBUX could continue trading sideways for weeks and months yet -- but at higher prices. This would occur in order to rein in the company's measures of valuation to something less astronomical than they are. In other words, a high level consolidation, or a correction more of time rather than price.

The analyst does not explain his rationale for the stop at $52.49, nor do I see one. It is not a level of prior support or resistance, it is not a Fibonacci retracement level, it is not trend line resistance. A trade (better, a close) above the 200-day sma could change materially the dynamics for SBUX.

Although I discern bullish portents and a positive pattern shaping up, more work (time) must be done until the potential base completes itself. That is, the chart must fill. I suppose one happy occurrence would be a trade at $52.50.

Questions? Comments?