The Bottom Line:
- Utilized the gap down plus three-day rule for strategic entry.
- First purchase made on May 8th after confirmation of trend reversal.
- Additional purchases made at $77 and $79 as the stock formed a cup and handle pattern.
- Targeting a price range between $84 and $87 for exiting the trade.
- Collected a 57-cent dividend as an added benefit of holding the stock.
Leveraging the Gap Down Plus Three-Day Rule for Entry
Leveraging Strategy for Entry and Adding Positions
In this video, the strategy used for entering a trade on Starbucks involved waiting for the stock to gap down after earnings, followed by a three-day rule. The key indicator for entry was when the selling pressure stopped after day four.
Monitoring Stock Movement for Exit Targets
The target exit for the Starbucks trade was set at a range between $84 and $87, aiming for a gap fill back to the low of April 12th. It was noted that there might be some resistance around $84 due to traders looking to break even from previous positions.
Building Position and Managing Additions
The approach to building a position in Starbucks involved adding more shares as the stock broke through key levels, such as a cup and handle pattern over $77. The strategy further included adding to the position when the stock cleared moving averages on the daily chart, with a focus on monitoring for continuation as the stock moved towards the exit target.
Confirming Trend Reversal with Initial Purchase on May 8th
Confirming Trend Reversal with Initial Purchase on May 8th
After observing the stock’s behavior following a gap down post-earnings, a strategic decision was made to wait for four days before initiating an initial purchase on May 8th. This marked the first addition to the position, which was further supplemented by additional purchases as the stock demonstrated strength by breaking key levels, like the cup and handle pattern at $77 and surpassing $79.
Exit Target and Consideration of Resistance Levels
The target exit for this Starbucks trade was identified in the range of $84 to $87, aiming for a fill of the previous gap that occurred on April 12th. It was noted that caution should be exercised around the $84 level due to potential overhead supply from traders seeking to break even.
Benefiting from Dividends and Monitoring Progress
In addition to the trade progression, a 57 cent dividend was collected as an added benefit. Stay vigilant for potential exits between $84 and $87 while keeping a close eye on the stock’s upward momentum and any signs of continuation towards the target exit range.
Capitalizing on Cup and Handle Pattern with Subsequent Buys
Taking Advantage of Cup and Handle Pattern for Additional Purchases
Once the initial entry point was established on May 8th, further opportunities to enhance the position were identified. Through the recognition of a significant cup and handle pattern formation, additional shares were purchased as the stock broke above key levels, notably surpassing both $77 and $79.
Setting Future Targets and Exit Strategy
The trade plan outlined a target exit range between $84 and $87, aiming to capitalize on a potential gap fill back to the low of April 12th. Caution was advised around the $84 level due to potential resistance from traders looking to offload positions and break even.
Maximizing Returns with Dividend Collection and Progress Monitoring
In addition to the strategic trades, a dividend of 57 cents was reaped as an added benefit. As the trade progresses, it is essential to remain vigilant for potential exit points within the $84 to $87 range, keeping a keen eye on the stock’s upward momentum and any indications of continuation towards the designated target exit range.
Setting Exit Strategy Target Range Between $84 and $87
Exit Range Target and Overhead Supply Consideration
The exit strategy for the Starbucks trade was set between $84 and $87, aligning with a gap fill objective back to April 12th’s low price. Caution was advised due to potential resistance at around $84, stemming from traders looking to break even and offload positions.
Dividend Bonus and Progress Monitoring
A 57 cent dividend added to the trade’s benefits, with the ex-dividend date set on May 16th. Continuing to monitor progress, traders were reminded to stay alert for potential exit opportunities within the $84 to $87 range, keeping an eye on upward momentum and signs of continuation towards the target exit levels.
Earning Dividends as an Added Benefit of Holding SBUX Stock
Collecting Dividends as an Additional Benefit of Holding SBUX Stock
Upon the successful management of Starbucks stock trades, a significant aspect of the overall strategy involved capturing a 57 cent dividend as a supplementary advantage. With the stock going ex-dividend on May 16th and the impending payment date at the end of May, this dividend served as an extra reward within the trading scenario.
Monitoring Progress and Exit Considerations
Emphasizing the importance of vigilance and active monitoring as the trade progresses, attention was directed towards potential exit points falling between $84 and $87. This strategic approach included keeping a close watch on the stock’s upward momentum and any indications of continued movement towards the designated exit target range.
