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Costco (COST) - Get Free Report suffered its worst breakdown since August 2015, on Friday. The retailer shed more than 7% as volume surged to nearly 10 times its 50-day average. This extremely damaging flush began with a huge downside gap leaving behind an ominous top in place. For patient Costco investors, there is light at the end of the tunnel as shares begin to show signs of stabilization today.

Back in early February, Costco began a powerful new rally leg with the help of high volume breakout gap. This news inspired ramp lifted the stock over 2.4%, ending a 10-week consolidation in the process. After a big move throughout February, Costco filled the Feb. 2 breakout gap in mid March. A fresh rally leg followed that drove the stock to new highs. Following two huge distribution days Costco has returned to this major support zone.

In the near term, investors should keep a close eye on the $164.00 to $162.00 area. This major support zone includes the December high, the Feb. 2 breakout gap and the 200-day moving average. If the stock can regain its footing here, despite the massive amount of recent damage, a very low-risk entry opportunity will develop. On the downside, a close back below $161.80 would violate the February low, indicating more downside is likely.

Costco's shares fell 0.9% to $162.89 by Tuesday's close.

Jim Cramer talks about oversold retail stocks on Real Money. Get his insights or analysis with a free trial subscription to Real Money.

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