SBUX (Starbucks Corp)

I am probably going to take some flack for this one since i am almost religious about my caffene intake each morning but I think the time is right to short Starbucks. I actually tried to short the name last year as the stock initially broke down from its high, but the bull market in the latter half of the year stopped me out. The pattern has worked its way further including an attempt to re-take the previuos high which failed both in October and November. Now the volume is picking up as the stock trades through and below the 200 and 50 day average. I expect that this time we will get a full bout of selling as the market is showing more and more ominous signs.

Fundamentally, the stock is expensive. This is not a good reason by itself to short a stock, but the deteriorating technical picture as well as the high price may work well together. The stock has been a favorite among institutional and retail investors alike. This is definitely positive for my position because if everybody who has any interest already owns the stock, there is really no one left to buy more shares. Hopefully this will act as an absense of demand and allow the price to come in substantially. Finally, the company has expanded to the place they may have saturated their market. Now that there are 3 stores for me to choose from within miles of my house somewhat outside the city, even I can see that there will be challenges in finding new locations that don't canibalize the sales of previous locations.

Now please don't get me wrong. I love Starbucks. I will continue drinking it each morning (and afternoon... and sometimes evenings). My favorite is the Yukon blend, and my son David loves their hot chocolate and sour cream donuts. Part of me hopes that i am wrong and will get stopped out next week, but I think the prudent thing for me to do for our investors is to try to gains some returns short on this name.