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Starbucks within XLY

The core of my equities trade (and stock trading) really is to look at the market from an index sector stock perspective. Right now we’re looking at the XLY, and right now this is one of the heavily weighted sectors within the NASDAQ.

Now I’m not necessarily looking at the NASDAQ, but there’s a few things that pop out. These are the names that are moving with the broader market, which is what I refer to as a “double green,” because of the way in which the exponential moving averages are moving within relation to one and other. However, we also have a number of stocks that are heavily weighted (and double green) within this sector.

In fact, there are 6 of them…

We know that heavily weighted stocks such as Amazon, which is within the top 11 heavily weighted stocks within the XLY, are important to follow. For instance, a ticker of that same degree is Starbucks, which is about 3.75% of the XLY.

Now having said all that, Starbucks meets the criteria for being one of the stocks I want to follow.

If you look at the chart for Starbucks, you’ll notice that the trend has been consistently up. In general, my preference is going to be to wait for the stock to go on sale. In layman’s terms, the sale is a lower price.

Now we know that within the context of the trend, we have the much discussed dip. And so that’s where “buy the dip comes” form. That’s exactly what we did in Starbucks — we waited for the dip. There haven’t been many, but when you do get them, especially when you get a market that’s been moving higher, you don’t hesitate…

You take advantage of it.

In fact, this is actually one of the trades that we took advantage of within my updated Sector Secrets Mastery. 

And that’s an idea that requires using that 21 EMA to define the dip. So that’s a question I’ll leave you with. How are you defining what qualifies as a dip? Because if you can do that, in a process-driven way in the same type of environment, you’ve got a repetitive system that’s going to let you take advantage of trends. Even when they are accelerated, like Starbucks. Considering Starbucks continues to punch up higher and higher. So the next question becomes “how high is high for Starbucks?” It will be interesting to see what happens here considering that this is a definite leader in this sector.

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