The Hidden Starbucks Holiday Setup

We test whether the Starbucks holiday drink frenzy leads to an increase in the stock price. Using a back tester with 31 data points, we compare three scenarios: buying Nov 1 and selling Jan 31, buying Nov 1 and selling Dec 31, and buying Jan 1 and selling Feb 28. The Nov 1 to Dec 31 window is the clear winner with the highest P&L. The strategy has been on a win streak since 2015, but the current gap-up after earnings makes a pullback toward the $95 gap fill a better entry.

The Hypothesis: Do Holiday Drinks Lift the Stock?

In the companion video, we revisit a seasonal idea from the prior year: does the Starbucks holiday drink frenzy lead to an increase in the stock price of SBUX? This setup triggers every year when Starbucks announces its holiday drink lineup. We built a simple back tester in ThinkScript to quantify the results across three different holding periods.

Three Scenarios Tested

The back tester evaluates three scenarios, each with different entry and exit dates:

Scenario 1: Buy November 1, sell January 31 of the following year. This captures the full holiday period plus some of January.

Scenario 2: Buy November 1, sell December 31. This captures just the holiday drink period from announcement through year-end.

Scenario 3: Buy January 1, sell February 28. This tests whether waiting until after the holiday period and buying in January captures any remaining momentum.

The results showed that Scenario 2 (Nov 1 to Dec 31) produced the highest P&L with the same probability as Scenario 1. The January holding period in Scenario 1 actually ate into profits rather than adding to them. Scenario 3 (Jan to Feb) was the least desirable, producing a roughly 50/50 outcome with no positive P&L edge.

Back Tester Results

The back tester reported 31 total orders (one additional data point compared to the prior year's 30). The P&L number grew as a result of a successful prior year. The strategy has been on a win streak since 2015, with the last losing year before that being 2013.

The back tester code is straightforward: a few lines that check which month the current date falls in, then buy or sell based on the scenario's month boundaries. The report shows total orders, P&L, and the win/loss streak.

Current Setup and Entry Considerations

At the time of the video, SBUX had already gapped up on earnings. The gap-up made the stock look too rich near what was expected to be resistance. A gap fill near the $95 level would offer a better entry price for anyone looking to participate in the holiday season trade.

Loading the Market Pulse indicator, the Market Pulse line sat near $94.57 at the time. As the Market Pulse catches up to price, it could serve as a simple reference point for where to look for a pullback entry to participate in the overall Starbucks holiday drink idea.

The Seasonal Catalyst

The seasonal catalyst here is straightforward. Starbucks announces its holiday drink lineup (led by the Pumpkin Spice Latte in late August/September), media coverage and social media engagement ramp up through November and December, foot traffic and gift card sales increase, and the stock tends to appreciate during this window. The back tester captures this recurring pattern year after year.

The bias is to the long side during the November-December period, but the entry price matters. Buying at resistance after a gap-up is not the same setup as buying on a pullback to support with the seasonal tailwind behind you.

Frequently Asked Questions

Which holding period works best for the SBUX holiday trade?

November 1 to December 31 is the best scenario. It produces the highest P&L. Holding through January (Scenario 1) actually reduces profits. Buying in January (Scenario 3) is roughly a 50/50 shot with no edge.

How many years of data does the back tester use?

31 data points (one per year). The P&L has been growing, and the strategy has been on a win streak since 2015. The last losing year before that was 2013.

What entry price should I look for?

At the time of the video, SBUX had gapped up on earnings and looked too rich near resistance. A gap fill near the $95 area was identified as a better entry. The Market Pulse line near $94.57 offered another reference point for a pullback entry.

What drives the holiday seasonal move in SBUX?

The holiday drink lineup announcement, increased media and social media coverage, higher foot traffic, and gift card sales through the November-December period. The back tester captures this recurring annual pattern.

Is the back tester code available?

The back tester is a few simple lines of ThinkScript that check month boundaries to trigger buy and sell signals for each scenario. It reports total orders, P&L, and win/loss streaks via the Show Report function in ThinkOrSwim.