Starbucks

Looks like a good sport for a short with a horizontal less than 2 percent away. It is 50 percent down to the likely support area. The measured move shows the scale of the topping pattern: it calls for a drop of nearly 90 percent.

Starbucks Primed for Collapse

Update: If the top turns into a H&S with that lower neckline, the target is down around $10 per share.

The linear chart also gives a target about 30 percent lower around $60 per share.

Hawkish Words from Fed Sinks Rally

The major indexes closed below their long-term support lines from Jan-Feb. The unemployment number for July is tomorrow morning out on Friday.

My trades for today: closed TLT. Closed AAPL and AMZN shots, then reopened AAPL higher in the day. Shorted SPY and IWM with 1 DTE puts midday, closed near close. Have XLE weekly and monthly puts. I don't discuss because they're an afterthought, but still holding all my gold mining calls. I like NEM $55 Nov as a kind of conservative trade. I did a small gamble on SBUX earnings, didn't work out so far. I also bought MPWR puts for September, way out of the money. Ended the day with a lot of cash. I'll post when I think it's all clear to short with reckless abandon, but for now I still expect two-way action in the market.

Island Reversals Incoming

Starbucks is the first I've seen completed, but there are many many potential setups out there because this pattern is common.

Good Luck American Brands in China

Global Times: Starbucks says no infestation found, after consumer complained about live cockroach in beverage

Starbucks China responded on Saturday afternoon after a consumer complained that a live cockroach was found in her Starbucks coffee, with the chain claiming that no infestation was found after multiple inspections.

The company said it immediately checked the surveillance video of the related store after it learned of the complaint, and said that store staff made the drink in accordance with standard operating procedures and used disposable sealing and leakproof packaging specially designed for takeout, according to a statement posted by the company on Weibo.

Starbucks said that the store has a complete elimination record, and also invited third-party pest service companies to conduct on-site inspections and thoroughly check in-store equipment on both Thursday and Friday, but no pest problems were found.

The customer posted a picture on Weibo on Friday, showing a live cockroach in her Starbucks coffee. The topic went viral online on Saturday and at one point ranked first on Weibo's hotly discussed topics.

iFeng: 网友喝饮料喝出活蟑螂，触角还在动 星巴克回应：点的外卖，没有发现虫害

Screen Part Five

I expanded the screen conditions for only a 5 percent drop and found yet more familiar names...

Coronavirus Booster Wave Charts

If the booster shots are causing cases to explode, we can expect another round of lockdowns in the totalitarian Blue states. Here are the best looking stocks in the crosshairs of the commies.

Luckin Coffee Uses Small Footprint to Challenge Starbucks

I haven't done an analysis of Luckin and I've been told its a cash burning machine. It had to be to some degree because it opened its first stores in January 2018, and it listed on the Nasdaq this month with 1,700 stores. I've heard their coffee is decent.

TechCrunch: Luckin leaves bitter aftertaste, now trading below IPO price

Luckin has dropped around 25% since closing its debut trading day at $20.38 per share, and 40% from its intraday peak of $25.96. As of Friday’s open, Luckin stock sat at $15.44, now well below its IPO price.

Caixin: Three Things to Know About China’s Starbucks Challenger

What pops out to me looking at their rental costs is Happy Lemon. They are a popular drink seller in China and most of their shops have a similarly small footprint. It sounds to me like Luckin is more a tech-driven startup (most sales are through its app and delivered). I don't think that's the way to compete in this space, it's more important to have a quality product and build brand loyalty. Happy Lemon has that following. It also maximizes its small area with a large menu and wide variety of drinks.

FT: Luckin Coffee shares slide on investor fears over cash burn

“Previously you would have groups from offices going to buy coffee because of the discounts,” said Shaun Rein, founder of China Market Research Group, a Shanghai-based research consultancy. “But we saw consumers stop going from February, as they decreased subsidies. There is very little brand loyalty to Luckin.”

Investors are concerned about cash burn and I would be too given their low rental cost. They shouldn't be burning cash beyond store set ups. My hunch is they're wrong to go after Starbucks premium with a unknown brand. Better to have paired with a known brand. If they rebranded all their stores with a partner such as Lavazza, or with Dunkin and rolled out the Dunkin menu of coffee, iced coffees and slushies in summer, plus added some local flavor with teas (Dunkin may not have enough brand recognition in China but you get the idea), I'd be willing to bet they turn cash positive rather quickly.

Right now, it looks like the tried and failed "meatspace" application of the Internet startup strategy: giving away the product to build a user base. In the physical world, technology becomes a commodity, it blends into the background. Some companies such as Amazon and Wal-Mart can keep the technology in-house by building expansive networks, but Luckin doesn't really have a technology advantage here, or at least not one that overcomes their lack of branding.

Converged Starbucks Tumbles

American college campuses are incubators for the self-described "social justice warriors," of SJWs for short. Many students come out of college having learned nothing of value and often retard their own intelligence by "learning" things that just ain't so. The version running around corporate America today was hatched a decade or two ago. The freshly minted versions will bring such advanced concepts such as kicking all whites or males out of a company or maybe segregating the seating in McDonald's restaurants to make "safe spaces" for "people of color."

Starbucks (SBUX) provides a good warning for any company that doesn't want be run by the American version of Mao's Red Guards. It's hard to say when Starbucks became a fully converged company because the CEO Howard Schultz is sympathetic to their politics, but the company was clearly converged after it opened its bathrooms to the general public after a single manager at a single store called the cops on two (black) people waiting for a friend (he thought they were loitering). He also closed all Starbucks locations across America to have racial sensitivity (employee struggle sessions) in response to one manager making one bad decision.

SJWs aren't only a threat to corporate board rooms. They've savagely attacked Nobel Prize winners and attacked a European Space Agency engineer who helped land a space probe on a comet because he wore a Hawaiian shirt with girls in bikinis on it. They try to get people fired at work, they hunt for"thought criminals" online and form mobs to attack the companies that employ them. They try to take over any organization, be it a company, church or volunteer group, and turn it into a political organization in tune with whatever SJWs believe today (We have always been at war with Oceania). If you start a bowling club and welcome everyone who loves bowling, they will complain about the race and sex of the group, or ask what the group's position on some political issue of the day. They will start agitating for "social justice" and for the group to take a political stance with no relation to its original purpose. A good book for understanding their attack strategies and how to deal with them is SJWs Always Lie: Taking Down the Thought Police.

Converged institutions are not simply political. A solar manufacturer could be run by a very political CEO who talks a lot about politics, but if he or she spends all day focused on making cheaper and more efficient solar panels, it is not coverged. A converged company is one where the original goal becomes secondary to political and "social justice" goals. Starbucks became fully converged and it paid the price. An organization that has effectively ceased to exist because it did not defend itself from SJWS is the Boy Scouts.

There will be many shorting opportunities in the future because many companies are well on their way to becoming converged institutions. One example is Marvel comics, now a subsidiary of Disney: Forcing Political Correctness On Employees And Characters Is Killing Marvel Comics There will also be many opportunities to create profitable companies devoted to their core mission.

Nice down move today, but will it reverse again?

I haven't had time to do a post on my Marketocracy portfolio performance last month, but I did add some inverse ETFs to a couple portfolios today. The Best of Funds was a bad performer since March because its been defensive most of the way, but it has outperformed over the past two weeks.

Although I recently added a small holding in China Rare Earth and had previously made a small purchase of CBM Asia Development (TCF.V), a coalbed methane exploration company with operations in Indonesia, my main positions are 20+ Year Treasury (TLT) and, for the moment, Double Short Oil (DTO).

I have some puts on Starbucks (SBUX) which I bought way too early. Going forward, I'll make use of puts, currency futures, and inverse ETFs.

I've been burned several times by market reversals, however, and I may quickly reverse all my bearish positions if the market moves higher with conviction.