Consumer Discretionary is the second-best performing sector year to date, up nearly 7 percent while the broader index is up less than 1 percent in the same period. And according to one trader's chart work, one of the sector's hottest stocks is about to get a serous jolt.
Shares of the coffee giant are up more than 30 percent year to date, making it the fourth-best performing stock in the consumer discretionary sector. And it's the recent pullback from the stock's all-time high that has Gordon convinced it's time to buy.
Looking at a chart dating back to the beginning of May, Gordon noted that there have been five similar pullbacks to the one we are seeing right now. "What that's done is show us symmetry or rhythm in the market," said Gordon, founder of TradingAnalysis.com. "Each of these pullbacks has been about $2 and that is presenting a nice zone for Starbucks to hold because it has done so in the past."
Starbucks hit an all-time high of $54.78 on June 26 and has fallen around 1.6 percent from there. "I'm seeing support between $53.20 and $53.75 in place," he added. And if that support holds, Gordon expects to see Starbucks rally as high as $55.50. That's 3 percent higher than Thursday's closing price and would put the stock at a new all-time high.
To note, Gordon's price target is slightly lower than the average Wall Street analyst of $56.61, per FactSet.
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