Costco (NASDAQ:COST) stores are always packed. From restaurant owners buying 35 heads of cabbage to the moms buying 4-lb. packs of butter for making cookies, it's often difficult to navigate the aisles with my 50 rolls of paper towels.
It does not matter if the economy is in recession, flat or booming. But the stock is not always so steady. So when it pulls back, I look for an opportunity to buy it on the cheap. One such opportunity may be presenting itself right now. Take a look at the chart below.
The Technicals
Costco's weekly chart over the last 3 years says a lot. First, notice the dips in price back to the 50-week SMA. Every time it touched it or went right through, the return back higher was very profitable. That happened 6 weeks ago and the upside separation is just starting to happen.
The RSI is also a signal. Every bounce off of the bottom of the bull range, at 40, has started a run higher in the stock until the RSI has moved over 70. And the MACD at the bottom is similar. Every bounce off of zero has continued higher to about 5.
All of these signals are showing as the stock price pushes against resistance at 154.50. A move over this would confirm another leg higher. The last two gave $45 and $40 moves.
A similar move would put Costco over $180.