Starbucks Shares Smacked As Coffee Prices Surge

Coffee Is The Strongest Market of 2014:
As of yesterday’s close, Coffee is the strongest market of 2014 – up a whopping 77%! Meanwhile, shares of SBUX are down 13% this year. In addition, SBUX is forming a large topping pattern while coffee prices are forming a large bottoming pattern.

SBUX Is Inversely Related To Coffee:
For the past few years (annotated charts attached), SBUX has been inversely related to the price of coffee. It will be interesting to see how this plays out in the near future. Don’t worry, SBUX will still be profitable and will not go out of business just because the price of coffee is rising. One of our institutional clients crunched the numbers and found out that SBUX will continue to print money even if coffee prices increase several fold in price from here. Remember, perception is reality on Wall Street and investors are likely dumping the stock because the perception is that rising input (coffee) costs are will hurt margins.
Starbucks: $SBUX
Coffee Prices: $JO