Sold Out, COSTNotes on chart including indicators using Rob Hoffman's Inventory Retracement Bar Trade algorithm.
COST trade ideas
COST finally out of consolidationCOST had been a great trending stock for quite some time - particularly through 2011-2013.
But the last year has been a poor one for the trend trader. On the weekly chart this is shown by the rounded bottom and on the daily chart by a period of consolidation.
The breakout from this zone was messy. Finally on 29th and 30th October we had a couple of bullish bars but the volume was on the low side so this was not a convincing long position. But yesterday's bar (4th November) broke out (from a one bar pullback) on higher volume. Might be a good buy opportunity again.
COST break up of consolidationCostco caught up some buying momentum after it broke up its consolidation resistance at $116.60 and had 2 days of follow through. Price found top at $126 and was sold off to $110 which acts like major support for this stock.
It was out of play for couple of months but for now if it will hold above breakout point it will keep active traders attention.
Higher lows and higher highs tell us that buyers are in control. Next important resistance is at $120 which could be our target.
$COST vs $WMT will Costco outperform Wal-Mart this month? #stockTrading Pairs/ Options Forecast: Cost will perform better this month
Strategies: Cointegration, Correlation and Technical
Analysis : Elliot Wave Studies www.bitcoinprice.mobi
Trading pairs Costco vs Wal-Mart which has moved from its correlation can be done based on cointegration or technical analyzing the prices of the stock pairs and tries to profit from the mean-reversion process.
Cointegration (left chart): look for the divergence pairs that have moved away from each other and then back together in a regular pattern:
1. Identify a gap.
2. Make a trade assuming the stocks will return to their correlated path
The strategy is therefore to identify when the “gap” is created and to trade in the assumption that there is a high probability the gap will close or narrow.
This pairs have a high positive correlation between them, meaning that both stocks historically tend to move together. Generally because they are from the same industry sector and traded in the same market, so the same factors impact them.
Technical Analysis of the spread (right chart):
Costco move together very closely and has a maximal correlation with Wal-Mart. This means it's profitable when the relative value between the two assets is perturbed from equilibrium, you can take a contrarian position and profit from the spread trading as the prices revert back to their long-run mean.
The trade should be opposite to the “gap”. Wal-Mart has performed better than Cost, in order to close the “gap” Cost will now perform better.
Ciprian,
google.com
$COST: Accumulation Support AreaLast week's momo was not enough to break through previous support at 112.40. If we get accumulation or and a bounce with enough momo, we should look to test 114, and possibly 116. If we lose support around 111, price will find support around 107.
COSTCO WON'T QUITCostco has been going up forever and it is almost at an attractive buying point. It broke my trend change line so I would epect it to go sideways for a few days before continuing the upwar trend. It will probably bounce arond 116-120 so try to get in as close to 116 as possible. Long-term upside potential is undetermined but it should go past its most recent highs of 126 no problem.
I would use 113 as my stop loss if you are looking for the quick dollar.
I would use the weekly support for the long-termers.
1/12
EDITED: Costco Reaches Price Channel ResistanceCOST is currently resting on the resistance line of a price channel that it has been in for 384 days. I would wait a couple of days before entering a short position for two reasons. The first being that it could break through the resistance line, and the second being that the .5 trend based fib is at 107.48, so I would wait a couple of days to see if it reaches that, then expect the reversal to take place. Many traders (including myself) think that the market is in for a correction in the very near future. This would be a good play if you're unsure on your outlook of the overall market, as COST should go down whether SPY has its correction or not.
Entry Point: 107.48
Exit: 99.5
Profit: 8.02%
EDIT: The edit made to the chart was a slight change in the slope of the price channel because the first one was a little off, which made the .5 trend based fib level outside of the price channel, when it in fact should be in the price channel.
