August 8, 2012 (By Frank Kollar)
Starbucks Corp (NASDAQ: SBUX) suffered through a self-inflicted correction after announcing a weaker outlook on July 26.
From the day of the latest earnings report, when SBUX closed at $52.41 to its selloff low at $43.04 only five days later, the coffee retailer had lost 18%.
Could the decline be over?
SBUX stayed at its lows for four trading days, and it rallying on Tuesday, August 7, up some 3.5% near the close. Importantly, that low is right at an important support level.
Chart Courtesy of StockCharts.com
$43.16 is the 50% retracement level for the entire rally from the August 2011 correction lows to the April 2012 rally highs. The 50% correction may have stopped the decline as traders see it as a likely reversal level.
A bullish trade here with a stop just below this support level would be a low-risk trade for what is a great long-term company to own.
The Fibtimer.com (http://www.fibtimer.com) Stock Timing Strategy does not have a position in Starbucks.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SBUX over the next 72 hours.