Now the retailer is due to report earnings after the close on Thursday.
These observations come as the stock has been on quite the tear.
Shares rallied in 15 out of 16 sessions starting Oct. 14. After a quick consolidation Costco stock then climbed in nine out of the next 10 days.
In all, it rallied in 25 out of 30 trading sessions in that run. Lately, it’s been a little different, though.
The stock is down in three of the past six sessions. By no means is this a red-flag alert, but it does show some vulnerability with a binary event on the table.
Trading Costco Stock
Let’s be straightforward with Costco. Shares are up more than 40% this year and almost 17% from the company’s last earnings report.
On Wednesday, the overall market was holding up pretty well and digesting the recent two-day rally. While Costco did well on Monday and Tuesday too, it did not do so well yesterday.
Shares fell 2.2% and put in a bearish engulfing candle. That’s as it opened above Tuesday's high and closed below Tuesday’s low.
Worse, it flushed below the 10-day and 21-day moving averages as well. Now hanging around Wednesday’s low, investors are waiting for earnings to move the stock.
There are two main levels that I’m watching on the downside and one level on the upside.
The first downside mark is the $510 to $514 area. That’s where last week’s low and the 10-week moving average come into play.
The second is the $500 area, which was the breakout and consolidation zone from October, as well as the 50-day moving average.
Gap-downs to either zone could present bulls with a buy-the-dip opportunity on Friday.
On the upside, keep an eye on this week’s high near $548, as well as the $550 level.
A gap above this area must hold by the close for bulls to remain in control. Above $550 keeps the 52-week high in play near $561. Above that and we can start looking for some key extensions, like the 161.8% extension of the current range near $590.