Shopping for a trade in Costco

First, a little info on Costco Wholesale:

COST_company_infoYou can find out more here if you are not familiar with $COST. Now on to some charts. Let’s start with a clean Daily chart:

COST_BThe dip under the 50 SMA in June was certainly short lived – now a Breakout in July. The RSI is running a little hot – is above 70 – so it will need to work off some of that, build a Flag/base would be ideal (digest the recent move). If you notice, it tends to pullback when it touches the 70 area (twice this year).

Now let’s add a trend line and resistance line:

COST_B_tooLooks like the false breakdown on June 24 was a great place to dip buy. If you did, well done ole chap. I will note one thing that I am cautious of here though: the Hanging Man candle on Friday. This signals a trend reversal, but needs confirmation Monday. Looks like I will need to be patient.

To get another perspective entirely, I will throw the PnF in the shopping cart for review:

COST_PnF_BThe most recent pattern is an Asc TT B/O on July 12 with some good follow through. There is a Bullish PO of 124 here so very much within reach of that from here (5%). Based on my review, this is what my plan is:

1) set a Price alert for 116.57 (the low on Friday)

2) review current Option chain for August for clues on how other traders are positioning

3) verify next earnings release (currently schedule for 10/09 but last reporting date was 5/30 so not sure about this long gap)

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