A few posts back I said that I would write another posts and reach a verdict on Starbucks (SBUX). The stock has a tendency to stay overbought for a long time, but with that said, its relative strength is gaining momentum. See below. Notice how the RSI has been trending upward. If SBUX were trading sideways or downward while this is happening, I'd say it's safe to buy. However, it's tricky to make a call when the RSI and the underlying stock are trending in the same direction. SBUX's gap up after earnings saw resistance at the trend line superimposed above, and didn't form a bull-flag like I thought it would. Instead, the stock simply gapped lower the next day subsequently continued higher.
Again, to make a call in this scenario is tricky. Starbucks is approaching overbought territory, and I believe that if it hits $60, the stock will see resistance from the trend line and psychologically. I definitely wouldn't advise shorting SBUX, but I do think that a $60 handle represents a good time to sell and take profits.
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