$COST: Strategy, Patterns, and ProjectionsNASDAQ:COST is a core position for me. It's a fundamentally strong company:
• The company has a favorable track record of earnings beats, including yesterday's call.
• It has a 15% five-year average return on capital.
• There has been a consistent five-year trend of growth in both revenue and earnings.
• The earnings have been consistently favorable.
• Over the past five years, they have been reducing their debt.
• Their free cash flow is good, but the ratio of FCF to enterprise value is a little lower than I would like. Additionally, the FCF has been somewhat inconsistent over the past five years.
• The five-year average dividend growth is 12%, with 18 consecutive years of dividend increases.
Over the past year, I have been accumulating within this pattern. Although I am not typically a pattern trader, this is a company that I follow closely and the pattern is fairly clear. Triangles are strong trading patterns that reach targets 67% of the time. However, they typically work best with small caps and in rising markets. The price can break in either direction. Projections are placed at the breakout area and are based on the vertical distance between the initial reversal points in the triangle. If the price breaks lower, it could fill the gap in volume between $390-450. $390 is a firm area of support. If it breaks high, a retest of the prior all-time high at $610 is a reasonable target, with the next likely overhead resistance at $650.
I'm unclear whether the movement in late April was a breakout followed by a throwback to the cradle, or whether the symmetry of the movement is still within the pattern. I plan to make an entry now and another entry upon confirmation of a breakout higher. If the move fails and breaks lower, my stop will be at $440 with re-accumulation closer to $400.
COST trade ideas
COST Earnings COSTCO earning tonight, just noticed it's in a HUGE pennant. Could potentially be a big movement, though the formation isn't complete so maybe it just hits the upper line?
One thing I like about COST is that they have employees checking he entrance and exit, no shrinkage (theft) problems for them.
No position, but I'd be inclined to go long not short. Good luck to the longs. Only issue with the stock is that PE is 35, which is high for a retailer. Growth is gonna slow down which might cause it to break downward out of the pennant eventually, but I don't think it happens tomorrow
COSTCO - BULLISH SCENARIO
Costco Wholesale Corporation (COST) is expected to report strong third-quarter fiscal 2023 results on May 25 after the closing bell.
Several key factors contribute to Costco's positive performance, including its effective growth strategies, efficient price management, steady membership trends, and expanding e-commerce business. By offering products at discounted prices, Costco has successfully attracted customers seeking both value and convenience.
These factors have played a crucial role in the company's consistent sales growth, as evidenced by an estimated 2.4% increase in net sales and a 6.5% rise in total membership fees for the quarter under review. Costco's total paid members continue to grow, driven by its expanding customer base and high renewal rates, which further bolster sales.
The first price target is located at $ 505
COST: bouncing on its 200-dayA price action above 500 supports a bullish trend direction.
Further bullish confirmation for a break above 512.00.
The target price is set at 523.00.
The stop-loss price is set at 493.00.
The price action remains above its 200-day simple moving average. Supporting a bullish trend direction.
Start of upside price momentum also applicable.
COST WCA - Awaiting a Breakout from SymmetryCompany: Costco Wholesale Corporation
Ticker: COST
Exchange: NASDAQ
Sector: Consumer Defensive
Introduction:
Greetings and thank you for taking the time to read my analysis. Today, we delve into the weekly chart of Costco Wholesale Corporation (COST) which has been forming a symmetrical triangle pattern for the past 12.88 months. This pattern is typically a sign of market indecision, and we're anticipating a breakout soon.
Symmetrical Triangle Pattern:
A symmetrical triangle is a chart pattern in technical analysis used by traders to predict future price movements. It is formed when the price of an asset consolidates between converging trendlines that slope towards each other, creating a triangular shape. The pattern is characterized by lower highs and higher lows, indicating a tightening price range as the market reaches a point of equilibrium between buying and selling pressure. In this case, we have 5 clear touch points on the upper trendline and 3 on the lower trendline.
Analysis:
Costco's price is currently above the 200 EMA, and given the clear uptrend preceding the triangle, we are inclined to see this symmetrical triangle as a bullish continuation pattern. However, the inherent indecision signaled by the symmetrical triangle means we should hold off on calculating a price target until a definite breakout occurs.
Moreover, a breakout must occur soon, as the closer we get to the triangle's apex, the weaker the effect of the breakout. This makes COST a high-priority watchlist candidate that should produce a result soon, regardless of the direction it takes.
Conclusion:
The Costco Wholesale Corporation weekly chart analysis points towards a symmetrical triangle pattern, indicating market indecision and a potential breakout soon. Traders should closely monitor this chart for signs of a breakout.
Remember, this analysis is not financial advice. Always conduct your own research when investing and consider risk management and proper position sizing when trading based on chart patterns.
If you found this analysis helpful, please like, share, and follow for more updates. Happy trading!
Best Regards,
Karim Subhieh
Symmetrical TriangleThis could also be called a large Descending Triangle.
Top line is a descending or a diagonal resistance line indicating lower highs with each swing up. This line must be broken to reach higher targets. T1 is in larger green type than T2.
Both patterns are neutral until broken.
Price is trying to bust through the .236 today of the trend up.
No recommendation.
Costco Faces a Potential Make-or-Break MomentCostco has been a steady performer for years, but now the warehouse retailer may be showing signs of exhaustion.
The first pattern on today’s chart is the falling trendline that began last April and the rising trendline from last May. The convergence of the two has produced a triangle, with prices currently nearing the end of the formation. Does this show buyers steadily losing interest?
Second, the 50-day simple moving average (SMA) slipped below the 200-day SMA in October and has remained there since. It’s different from the rest of the market, suggesting that the longer-term trend may have weakened.
Third, notice how prices tried to move above the 200-day SMA and failed after COST reported lower same-store sales on April 6. The shares have also struggled at the 50-day SMA.
Finally, relative strength versus the S&P 500 has been mostly negative since the broader market started climbing in October. This may indicate COST -- with its relatively high valuation -- is losing favor as investors shift to new stocks.
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