Buy the Dip in Starbucks (and AMD)?
SBUX is giving us a nice post-earnings dip to buy
I have remained pretty steadfast in my approach this summer, as volumes remain low and the indices continue to chop near their highs despite strong rotations beneath the surface: Quality over quantity.
Starbucks has been a rewarding trade so far this summer, as it ran to new highs in late July. In fact, it was one of the more profitable trades in the last few months. In that sense, this setup could be one that we use just part of our profits to play with on the post-earnings slump.
Starbucks
A look at this chart is pretty simple: Buying a dip to the 50-day moving average. SBUX has been trending higher and while the stock has been weak over the past few weeks, one could argue we’re looking at a shallow “ABC” type pullback to a key moving average.
A break of $114.25 could open up the $109 to $110 area and the 200-day moving average. Otherwise, I’m looking at the $119 area on the upside, followed by the $122.50 to $123 zone. Above that and the gap-fill area is on the table.
AMD
AMD is another one I’m watching. Obviously if the overall market pulls back, AMD and SBUX will likely struggle.
However, this has been more of a “when” not “if” rally in AMD stock.
Ever since NVDA exploded out of its long consolidation to new highs, I have been expecting AMD to do the same thing.
It’s now testing short-term support after a big move. If AMD takes out Tuesday’s low, the $99 to $100 area could be in play. On a bounce, look for a move north of $110. Above that puts $115.75 on the table, then $120 to $122.50.
Cheers!
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.