Costco buyers have clearly been stocking up for quite some time.
As a follow-up to a post I wrote last month about Costco, the warehouse retailer continues to show signs of buyer exhaustion after a steep, multi-quarter uptrend. The first chart below of the quarterly timeframe should clearly illustrate this point. The steep angle of ascent followed by last quarter’s shadow at the top of the candle should at lest give bulls some pause here.
Furthermore, the second chart below of the weekly timeframe shows a clear RSI negative divergence (top pane) since May, along with a bearish MACD cross. So, momentum has indeed been slowing considerably in the stock as the uptrend became steeper.
Finally, an ideal short entry would be a bounce up to the now-declining 50-day moving average at $115.44, which fails.
Earnings, however, are scheduled for October 9th. I typically do not play stocks into earnings. Barring some type of a massive move afterwards, which is when I would take a look at entering, the setup is likely to remain in play.
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