Chart of the Day: Costco Is Resting Comfortably
Costco ($COST) is right back to familiar territory. COST jammed the bears in May as the stock went against the grain, rising on most days when tech stocks were weak. Call it a counter-cyclical move, but when money started to rotate this big retailer was a source of funds. It is tough to put a finger on why the stock failed to rise up, but we did see an overbought condition that needed a burn off (from late May, see arrow in chart below).
Moving back down to the $950-970 range is common ground. Buyers and sellers have gathered here on several occasions as a meet-up place. That’s good information to know if Costco runs too hot again to the upside, as we can reliably count on this level to hold price (though we know it is not perfect, but a good reference point).
Momentum has certainly come out of Costco. Notice the weakness in MACD and the ADX (pane 4), which is down and out. Money flows are also poor, but since price is holding here there is no reason to believe at this point there is stock distribution, though we can certainly say accumulation is not happening, either.
Perhaps some news will generate some buyers to step up, but for now we’ll just sit and wait.
We like Costco in TheStreet Pro Portfolio and rate it a One, or “buy at anytime.”
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At the time of publication, TheStreet Pro Portfolio was long COST.
