(MENAFN- Daily Forex) Short Trade Idea

Enter your short position between 84.00 (Friday's intra-day low) and 86.50 (Friday's intra-day high).Market Index Analysis

• Starbucks (SBUX) is a member of the NASDAQ 100, the S&P 100, and the S&P 500.
• All three indices try to hold on to records, but bearish catalysts are accumulating.
• The Bull Bear Power Indicator of the S&P 500 is bearish with a descending trendline.

Market Sentiment Analysis

Equity futures are rising following a volatile week, which saw new worries about the AI bubble, partially fueled by concerns over creative accounting rules for depreciation of massive infrastructure investments and by revenue concerns. Despite the end of the government shutdown, economic data may trail for a while. Still, investors await NVIDIA's earnings on Wednesday, which will move markets. Other notable earnings reports, this week, include Walmart, Home Depot, Target, Lowe's, and Gap, which will offer insight into consumer spending Fundamental Analysis

Starbucks is the world's largest coffeehouse chain. Many credit it with launching the second wave of the global coffee culture. The company serves customers in 80 countries from over 35,700 stores.

So, why am I bearish on SBUX after its earnings report?

While revenues of $9.50 billion beat estimates of $9.31 billion, earnings per share of $0.50 fell short of expectations of $0.65. Global same-store sales dropped 2.0%, marking the sixth consecutive quarterly contraction and worse than the 1.3% contraction analysts expected. Rising costs and capital expenditures, amid an uncertain consumer outlook, drive my bearish narrative. I also expect US labor costs to increase, while SBUX continues to lose ground internationally.

Starbucks Fundamental Analysis Snapshot

The price-to-earnings (P/E) ratio of 52.01 makes SBUX an expensive stock. By comparison, the P/E ratio for the S&P 500 is 30.26.

The average analyst price target for SBUX is 94.17, suggesting moderate upside potential amid rising downside risks Technical Analysis

Today's SBUX Signal

• The SBUX D1 chart shows a price action breaking down below its horizontal resistance zone.
• It also shows price action challenging between its descending 38.2% and 50.0% Fibonacci Retracement Fan levels following a breakdown.
• The Bull Bear Power Indicator is bullish with a descending trendline, nearing a bearish crossover.
• The average bearish trading volumes are higher than the average bullish trading volumes since its earnings report.
• SBUX corrected as the S&P 500 holds on to gains, a bearish trading signal.

My Call

I am taking a short position in SBUX between 84.00 and 86.50. Valuations are high, gross margins rank among the worst in the industry, and competition from Chinese coffee houses and tea chains is heating up.

• SBUX Entry Level: Between 84.00 and 86.50
• SBUX Take Profit: Between 67.97 and 71.55
• SBUX Stop Loss: Between 89.99 and 92.44
• Risk/Reward Ratio: 2.68

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