One Of The Biggest AI stories Right Now Is A Coffee Company

Trade of the Day Wake-Up Watchlist

"One of the more interesting AI stories right now is a coffee company, and the chart lined up right behind it."

Nate Bear, Lead Technical Tactician, Monument Traders Alliance

Nate Bear

One of the more interesting AI stories right now is a coffee company.

Starbucks is going all in on AI, and not the way you would expect. They are not buying chips or building data centers. They are writing their own software to replace the expensive programs they rent from Microsoft and IBM.

The company spends about $400 million a year on software, and this is part of a plan to cut $2 billion in costs. When a company trims that much fat, more of every dollar of sales drops to the bottom line.

A story like that gets my attention. But a good story is not enough to put a stock on my watchlist. The chart has to back it up, and this one does.

So let me walk through it the way I look at every setup, with my TPS framework. Trend, Pattern, Squeeze. In that order, every time.

 

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Start with the trend. On the daily chart, Starbucks has its short, medium, and longer moving averages stacked in the right order and rising, with price sitting on top of all of them. Zoom out to the weekly and it is the same picture.

When both timeframes line up like that, the path of least resistance is up, and I do not have to guess about it.

The stock is up around 27% this year and pushing back toward its highs. This is not some beaten-down name trying to bounce off the floor, it is a strong chart that already did the hard work and is going back for more.

Next, the pattern. This has been a turnaround story all year. Starbucks bottomed out last fall down near 78, and it has climbed steadily since on real improvement in the business, not just hope.

Sales are growing again and the company is executing. That kind of base is the foundation a bigger move gets built on.

Then the squeeze, which is my favorite part. Starbucks is in a TTM squeeze right now, and that squeeze is on. A squeeze is what happens when a stock coils up tight and volatility gets wrung out of it.

Think of a spring being compressed. The tighter it winds, the bigger the release when it finally lets go, and the momentum under this one is already pointing up.

So look at what is stacked up here. A stock in a clean uptrend on two timeframes, a real turnaround underneath it, a squeeze that is on, and a fresh AI catalyst that has nothing to do with the crowded chip trade.

That is the whole reason it is on my watchlist. I am not chasing it here and I am not telling you to. I am watching this setup and letting it come to me.

One thing to keep on your radar. Starbucks reports earnings on July 28, and earnings can move a stock hard in either direction. A squeeze going into a known event like that is worth respecting, not front running.

A name like Starbucks lining up is not random. It is what happens when money starts rotating out of the crowded trades and into places most people are not looking yet. That rotation is the whole thing I am focused on right now.

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If you want to see the rotation before it shows up in the headlines, save your seat.

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