Starbucks’s stock was down to 7$ per share in November 2008. Five and a half years later, at a price of above 73, the future looks bright for the corporation’s shareholders. Rising prices may provide enough confidence for most people, but as Elliott Wave analysts, we prefer to support our expectations with some evidence. In the search for evidence, we are looking at the charts. A weekly chart of Starbucks’ stock is given below.
As depicted, the rally looks almost like an impulse. “Almost”, because its fifth wave is not finished yet. In 99% of all cases, wave five would make a new high above wave three. In the remaining 1% there would be a truncation. Going with the highest probability, we are expecting a new top around 85$ per share. Instead of being optimistic, when that top is reached we will be preparing for a reversal to the downside, because according to the Wave Principle, every impulse is followed by a correction in the opposite direction.