Good Setup Developing in Starbucks

Published on Wednesday, 05 December 2012 08:16 Written by TradersHuddle Wire

New York, December 5th (TradersHuddle.com) - Starbucks Corporation (NASDAQ:SBUX) closed the trading day at $51.12, near its 50 day and 200 day moving averages set at $49.24 and $51.62 respectively. Starbucks' price action placed the stock above the 50 day moving average but below its 200 day moving average, providing a nice trading setup with clear reference points.

Starbucks Corporation (NASDAQ:SBUX) retails, roasts, and provides its own brand of specialty coffee. The Company operates retail locations worldwide and sells whole bean coffees through several distribution channels. Starbucks also produces and sells bottled coffee drinks.

Starbucks seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach appears to be the best way to maximize possible movements in the stock, as traders could establish a small position in Starbucks and wait for the stock to break out above the 200 day moving average at $51.62. Then they could add to the position as momentum builds with the breakout. On the other hand, if support being referenced at the 50 day moving average set at $49.24 breaks, it could signal further downside for Starbucks in the horizon.