In our last update on Costco Wholesale (COST) - Get Report , we were bearish. A review of the latest charts and indicators shows that the price decline has slowed, but we do not have enough technical evidence to suggest prices can start a fresh uptrend.
In this daily bar chart of Costco, below, we can see prices gapped lower last month and in just a few weeks have declined to test support from September to November. Prices are below the declining 50-day moving average line and below the cresting 200-day moving average line. The daily On-Balance-Volume (OBV) line is still pointed down, suggesting that sellers of Costco remain aggressive.
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On the positive side, there is a bullish divergence between the lower lows in price from June to July and the higher lows in the momentum study. In the scheme of things, this is not a big divergence but it might be the start of some price stability.
In this weekly bar chart of Costco, below, we can see prices are below the peaking 40-week moving average line. The weekly OBV line is telling us that sellers have been more aggressive. The weekly Moving Average Convergence Divergence (MACD) has crossed below the zero line for an outright sell signal.
In this updated Point and Figure chart of Costco, below, we can see the straight-down move -- the long column of O's. There is potential chart support on the chart but there is also a possible price target of $118 displayed.
Bottom line: Costco could bounce in the near term because of the slowing momentum picture, but not enough new base building is shown to turn positive on Costco's prospects.
Costco shares fell 0.2% to $151.76 on Thursday morning.
(This article originally appeared Wednesday on Real Money, our premium site for active traders. Click here to get great columns like this from Bruce Kamich, Jim Cramer and other writers even earlier in the trading day.)
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