Costco Wholesale Rebounds On Earnings But Fails At Its Annual Pivot

Costco Wholesale
COST
traded as low as $406.51 on May 20 then rebounded to $474.88 on Friday, May 27, but could not hold its annual pivot at $471.70. Costco sales beat estimates but same-store sales disappointed. This was caused by rising freight and labor costs. Costco is a global leader in retail sales. Costco operates 830 warehouses globally, which includes 574 in the USA.

Costco has a p/e ratio of 35.10% and a dividend yield of 0.82%, according to Macrotrends. It has beaten earnings-per-share estimates in five consecutive quarters.

The Daily Chart for Costco

The daily chart for Costco shows a strong rally that continued in June 2021. The 50-day simple moving average was rising with the stock until it failed to hold on January 10, 2022. The stock declined from $571.48 on December 29, 2021, to a low of $469.01 on January 24, 2022. From this low the stock rallied to its 52-week high of $612.27 on April 7, 2022. From the April 7 high of $612.27 to the low of $406.51 set on May 20 the stock plunged by 33.6%.

The highest horizontal line is the quarterly risky level at $596.61. The middle horizontal line is the semiannual pivot at $518.50. The lowest horizontal line is the annual pivot at $471.70, which was crossed today, Friday May 27.

The 50-day simple moving average is $536.01 is declining towards the 200-day SMA at $509.95. When the 50-day falls below the 200-day a death cross will be confirmed.

The Weekly Chart for Costco

The weekly chart for Costco is negative with the stock below its five-week modified moving average at $503.49. The stock is well above its 200-week simple moving average, or ‘reversion to the mean’ at $340.76.

The 12x3x3 weekly slow stochastic reading is declining at 30.06. This measure scales between 00.00 and 100.00 where readings above 80.00 are overbought and readings below 20.00 are oversold.

Trading Strategy: Buy Costco on weakness to the May 20 low of $406.51. Reduce holdings on strength to semiannual pivot at $518.50.