Starbucks Stock: A New Low Or A Turning Point?

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If you’re an investor in Starbucks Corporation (Nasdaq: SBUX) and have been disheartened by the stock’s continuous decline, it’s important to keep two things in mind.

First, Starbucks has a long-term track record of success. Since 1993, the company has generated over 20,000% in returns for its shareholders, including dividends. This is a remarkable achievement that speaks to the company’s strong fundamentals and ability to adapt to changing market conditions.

Second, if we look at a long-term weekly chart of Starbucks going back to 2009 when it was a $5 stock, we can see that the stock has consistently trended upward over time, even in the face of significant challenges such as the 2020 Covid pandemic.

(Click on image to enlarge)

SBUX chart by TradingView

Despite occasional dips and corrections, Starbucks has managed to make new all-time highs and is still trading above its long-term trendline.

It’s important to keep these long-term trends in mind when evaluating the current state of the stock. While it’s natural to be concerned about short-term fluctuations, it’s also important to maintain a broader perspective and consider the company’s overall trajectory.

Is the worst yet to come?

Of course, as with any investment, there are risks and uncertainties that can cause it to fall more. But, for those who are considering buying Starbucks stock, it’s worth noting that the current price represents a potential buying opportunity.

Analyzing the current market dynamics through the lens of daily charts reveals a notable occurrence: the Relative Strength Index (RSI) has descended into oversold territory, indicating a potential impending rebound in the near future. This technical signal suggests a possible shift in momentum that could lead to a price recovery.

(Click on image to enlarge)

SBUX chart by TradingView

Even in the absence of an immediate rebound, long-term investors need not lose hope, as the stock maintains its position above a crucial support level near $82. This level has historically served as a strong foundation, prompting price reversals in the past.

While the prevailing sentiment favors bearish control, optimistic investors may consider establishing positions at this juncture, banking on a potential turnaround. Maintaining a close eye on the daily charts and ensuring that the stock remains above the $82 support level is crucial for those looking to capitalize on a potential upward movement.

Conversely, investors contemplating short positions should exercise caution given the stock’s recent significant decline. Timing is key for bearish investors, who should await a definitive close below $82 on the daily charts before considering fresh short positions.

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