Costco Faces a Potential Make-or-Break Moment
Costco has been a steady performer for years, but now the warehouse retailer may be showing signs of exhaustion.
The first pattern on today’s chart is the falling trendline that began last April and the rising trendline from last May. The convergence of the two has produced a triangle, with prices currently nearing the end of the formation. Does this show buyers steadily losing interest?
Second, the 50-day simple moving average (SMA) slipped below the 200-day SMA in October and has remained there since. It’s different from the rest of the market, suggesting that the longer-term trend may have weakened.
Third, notice how prices tried to move above the 200-day SMA and failed after COST reported lower same-store sales on April 6. The shares have also struggled at the 50-day SMA.
Finally, relative strength versus the S&P 500 has been mostly negative since the broader market started climbing in October. This may indicate COST -- with its relatively high valuation -- is losing favor as investors shift to new stocks.
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Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern on today’s chart is the falling trendline that began last April and the rising trendline from last May. The convergence of the two has produced a triangle, with prices currently nearing the end of the formation. Does this show buyers steadily losing interest?
Second, the 50-day simple moving average (SMA) slipped below the 200-day SMA in October and has remained there since. It’s different from the rest of the market, suggesting that the longer-term trend may have weakened.
Third, notice how prices tried to move above the 200-day SMA and failed after COST reported lower same-store sales on April 6. The shares have also struggled at the 50-day SMA.
Finally, relative strength versus the S&P 500 has been mostly negative since the broader market started climbing in October. This may indicate COST -- with its relatively high valuation -- is losing favor as investors shift to new stocks.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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