The last day of August and a Friday before a long weekend are not great times to open new positions.
As a result, today’s trade idea is one that may begin today, but it will also be good next week.
Read below for this explosive breakout setup.
The chart below is Starbucks (SBUX), and the reason I’m highlighting it now is because over the last 30 days its chart has become the most compressed it has been since March.
Compression like this tends to lead to breakouts that continue.
Yesterday, it broke out.
I expect this breakout to continue as long as the general market doesn’t collapse.
As a result, the trade setup is to be a buyer between $97 and $98.50 with a stop under $94.
I would not buy under $97 because that may be the first sign of a failure, and I would not buy over $98.50 because that would make the stop too wide.
Therefore, if it trades over $98.50 wait for a pull back into the buy zone.
If it trades under $97, wait for it to get back over $97 to enter the trade.
The nice part about compression breakouts is that the trade setup is really this simple.
So I won’t complicate it.
Keep an eye on this one next week, and enjoy the long weekend.
Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation