Wednesday, July 15, 2009

SBUX looks like it might of Topped out.

Short, Intermediate....and perhaps Long possibly has.
Weekly and 60min charts to the upper right.

Gaming earnings is never the "best trade", as I re-iterate that now and again. Very very rarely will I speculate of an earnings reaction. I much prefer to watch the reaction, THEN jump on board and forgo the initial portion of the move to in turn obtain the ability to watch it's hand tip first. Sometimes even that is difficult too. Ex: something just did not "feel right" yesterday to me with GS, even tho I wanted to short at 150, and had planned to if it could not get over it... I think it was b/c i felt EVERYONE in the world was watching that ezact same set up right there. Plus they way they closed it at 150.00 right on the button, just seemed "strange", felt like a trap. It just didn't feel right, so I didn't enter it. I'm now in hingsight glad I had that feeling, b/c I had strongly contemplated entering heavily short at 149.50.

I don't normally like to trade earnings, and the only earnings report that I have ever given an opinion on w/ rationale on this blog was TM back last qtr.

I do have a strong opinion SBUX is going to have a terrible report. I feel they have a terribly flawed business model.
(***I am short SBUX for disclosure and will remain short for at least 1 week, possibly for 2-3 weeks***)
Also MCD, GMCR and THI...are there to gobble up it's market cap and all 3 of those have a better business model to me.

Estimate EPS for Tuesday is .19. They have not earned that much since the 1st qtr 2008.
Why is it that high?....sure there are many factors beyond what the eye can see, so that's not something worth over-analyzing or breaking down. However the "momentum" of the broad market is one of the factors. Remember, when the market goes up=Analysts raise the bar. When the market goes down=Analysts lower the bar. Analysts are chasers and pumpers. (that does not mean they are always wrong or always right...they are just almost always kinda late to the party)

GS can make money in any market. INTC has tons of foreign exposure and they even said that China was the best part of its earnings. Yea SBUX has a couple franchises overseas, but its backbone is almost entirely the U.S. consumer. (which I feel is a very bad thing here, and if people think that everyone is going to report like GS and INTC, they they are out to lunch)
I think that intermediate term (over the next few weeks) that the more likely scenario is that many stocks are getting set up for a fall, as we get into the 2nd and 3rd tier company's....I don't see the likely hood of a majority of "intc/gs" type blowouts.
I could be dead wrong, I could be...and that broad market hunch is NOT one that I will "fall in love with".
I have always been a far better individual stock trader, than a broad market trader. As far as the broad market, I think that once we get 1-2 more weeks worth of earnings and can disect what differant sectors have done before and after and we can start to notice some trends, whatever they may be, then look to front-run trade them.
Again, last qtr's stradegy of simply find the most heavily shorted stock, and buy it 3 days before ER, then sell it 1 hr before...I doubt that will work as well this time. That only worked so well last qtr, b/c the vast majority of stocks were "reporting well" there was a broad market fear drivin into the shorts, no matter who the company was.

This is just my opinion, and yea it's a strong one.
I think Starbucks is dead money, and that without a timeline:
My call is that it sees 9 before 15.50, possibly sometime in August.
blog comments powered by Disqus