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Starbucks could be due for a fall to mimic the drop in Dunkin' D

Starbucks could be due for a fall to mimic the drop in Dunkin' D

Sugar #11 ICEUSA:SB1!

Take a look at these compelling charts to see that Dunkin' Donuts is leading the way for Starbucks. DNKN headed south after hitting a new high this summer and now sits 25% off of its high while SBUX sits very close to its high.

Investors will get an earnings report on SBUX on October 29 which will give us some new clarity. DNKN reports on the 22nd of October, an entire week before SBUX.

Another bearish phenomena for SBUX is the potential for a move higher in the price of sugar and coffee. Sugar is up 30% from it's recent multi-year low and coffee is turning up from a long term double-bottom. Both of these important commodities have helped SBUX earn a higher margin in the last 4 years thanks to their falling prices.

Earlier this year I posted a chart on SBUX (See link below) that pointed out the long term bullish breakout pattern and the upside potential that we have seen and have realized this year. I hope you can see the logic in exiting SBUX here and swapping out for a long position in Dunkin' Donuts. Time will tell if this is the wrong call.

Cheers.

Tim 10/6/2015 10:04PM EST

DNKN 42.22 last
SBUX 58.69 last