Starbucks’ New Style: Change Is Brewing, But Patience Needed

By Levi at Elliott Wave Trader; Produced with Avi Gilburt

Walk into a Starbucks cafe today and you’ll notice there is palpable change compared to a year ago. The new CEO is steadily steering the culture back to the cozy cafe style that made Starbucks iconic in its early years. There is a strong narrative at work here. Should we buy into the story? How do you personally craft your own trading and investment plans? 

When you hear a story spun, sentiment often takes over quickly. Have you ever felt compelled to trade on emotion? How often does a trade become a ‘long-term hold’ simply because price moved against you, inviting rationalization?

What about a composite methodology that seeks the synergy between the current fundamentals and the study of crowd behavior? That would just about cover all the bases. Well, keep reading and we will share exactly that type of analysis with you. 

We will use SBUX as our case study. First, Lyn Alden provides a snapshot of the current fundamentals and renders an opinion of the stock. Then, we turn to the structure of price on the charts to see what sentiment is telling us. This can be used to project likely probabilities going forward. Ready? Let’s do it. 

Lyn Alden Weighs In On SBUX

Lyn Alden frequently shares insights on various stocks with our StockWaves members. Our lead analysts then examine the charts for high-probability setups, both bullish and bearish. Here’s her take on SBUX: 

“SBUX continues to be rather expensive for its lack of growth, and so I continue to avoid it. It's tradeable, but I see little current fundamental reason to hold it.” - Lyn Alden

We keep close in mind that stocks and the markets do not always trade in line with fundamentals - in fact, they often diverge, sometimes dramatically. But we have the start of a thesis here and can round it out with sentiment analysis. 

Sentiment Speaks About SBUX

Avi Gilburt shared the following regarding how markets truly work: 

“Elliott Wave theory understands that public sentiment and mass psychology moves in 5 waves within a primary trend, and 3 waves in a counter-trend. Once a 5 wave move in public sentiment is completed, then it is time for the subconscious sentiment of the public to shift in the opposite direction, which is simply a natural cause of events in the human psyche, and not the operative effect from some form of ‘news’.

In fact, the former Chairman of the Federal Reserve, Alan Greenspan, understood this fact well. During his tenure, in several hearings in front of the Joint Economic Committee, Mr. Greenspan noted that the idea that the Fed can prevent recessions is a "puzzling notion" . . . Rather, the stock market is “driven by human psychology” and “waves of optimism and pessimism.”

This concept is inherent in the aggregate actions of individuals. Based upon these concepts, it is clear that man's progress and regression does not take the form of a straight line, nor does it occur randomly in nature. Rather, it progresses in 3 steps forward, with two steps back within the primary trend.

This is the basis of the Elliott Wave theory. This mass form of progress and regression seems to be hardwired deep within the psyche all living creatures, and that is what we have come to know today as the “herding principle,” which is what gives the Elliott Wave theory its ultimate power.” - Avi Gilburt

Theory is helpful - but does it truly hold up in real-world markets? Let’s test it.  

Let’s Apply Theory To SBUX

First, Zac Mannes shares his latest update to the chart.

If you are familiar with the Elliott Wave ‘alphabet’ then you will immediately recognize what sentiment is telling us. The various nomenclature placed along the structure is based on the context of the entire chart. For readers unfamiliar with Elliott Wave nomenclature, each label represents a distinct stage of market sentiment within the broader trend. This is a zoomed-in view and it speaks volumes.

Look to the lower right of the chart: we anticipate price eventually completing Primary wave 4, marked by the white circle ‘4’. Timing isn’t specified; instead, subwave structure signals completion. 

The March 2025 top was significant. It is marked as the C of (B) of this Primary wave 4. Thereafter, price has formed a wave 1 down of the (C) and has finished off the corrective wave 2 bounce as well. Since 3 always follows 2, that is what is expected next. This should also be the most powerful wave down of the (C) of Primary 4.

Next, take note of a key point in this structure. You can see that Zac has placed a magenta C of (Y) as a potential path as well. Why is this? Markets are dynamic and fluid in nature. Sentiment can shift. The magenta path takes this possibility into consideration and is there as a place mark for the moment. However, in this current setup as illustrated, we can clearly identify our risk as the top of the prior wave 2. The potential downside is the $55 - $63 area.

Now, many will take us to task with “such a low projection” and conjure up all sorts of reasons why it would never reach such depths. And, that’s OK - not all scenarios are certainties. We do though have specific parameters to provide guidance. 

A Post Action Report Via NKE

Please allow me to share another similar type of situation we highlighted. This one was NKE stock. Back in January 2024 we wrote about the downside setup forming. Periodically we updated readers as the scenario unfolded. 

Here’s the timeline:

Early January 2024 (initial downside setup)

Late February 2024 (setup further confirms via price action)

July 2024 (downside structure not yet complete)

December 2024 (yet more correction to go, be patient)

And, finally, once the entire structure had completed in April of this year, we presented a long-term bullish scenario for NKE here.

Conclusion

So, as you can see, this methodology is not to explain what has happened. Rather, it excels in projecting a probable path forward and then providing key price levels to show where this path is better confirmed, needs refinement, or may even invalidate. 

Using this methodology, traders and investors can stay prepared, not surprised — ready for SBUX’s eventual bullish setup when it arrives. Come visit us and discover how we apply this daily across hundreds of stocks!