Shares of Costco (COST) - Get Report have been steadily improving since last Thursday's low. With today's 1.5% jump, the retailer is working on its fourth straight gain and is now trading at new February highs. The bullish action appears to be leaving behind a solid bottom.

Costco is not in full breakout mode yet, but investors should be very encouraged by this week's move.

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Costco's recent selloff began with an ugly earnings-inspired breakdown gap on Dec. 9. The stock fell over 5.4% that day on its heaviest selling pressure in over a year. This flush left behind an extremely damaging spike high as the stage was set for a deep pullback. By the middle of January, shares had dropped below the 200 day moving average after falling 15% from the Dec. 8 high. The stock quickly began to bottom after this low, a pattern that included a slightly lower monthly low this month. During this process, Costco fell to its deepest oversold reading, as per its daily MACD indicator, since the 2008 bottom.

The rebound off the early February low has regained the 200-day moving average. As earnings near, the recent basing action has taken on a more positive tone. With the stock still in oversold territory and support now building underneath, Costco bulls should consider the stock a low-risk buy near current levels. Investors should keep a close eye on the $151-to-$149 area. If the stock can continue to hold this area in the near term, the bullish forces will remain in place. On the downside, a close back below this week's low of $148.50 would be a clear warning sign.

Costco is scheduled to report its second-quarter results one week from today.

Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.