Costco Wholesale Corp. (COST) has been moving sideways for the past four months but it looks like it is getting ready for an upside breakout when you consider the movement of the On-Balance-Volume (OBV) line.
The market could use some leadership from a stock like COST, so let's check out the charts and indicators.
In this daily bar chart of COST, below, we can see a rally phase from February to early September. Prices then turn sideways and COST crosses below and above the 50-day moving average line. The slope of the 50-day average line has been negative for about two weeks so it may not take much of a rally to turn the trend positive.
Prices are still above the rising 200-day moving average line which intersects down around $212.
The daily On-Balance-Volume (OBV) line shows a rise from early June despite prices peaking in early September. Even though the trend of COST has turned neutral, the OBV line continues to suggest that buyers of COST have been more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed to a cover shorts buy signal but has stopped short of crossing the zero line for an outright go long signal.
In this weekly bar chart of COST, below, we can see that prices are above the rising 40-week moving average line.
The weekly OBV line shows a three-year rise and supports the bull case.
The weekly MACD oscillator crossed to the downside in late September for a take profits sell signal.
In this Point and Figure chart of COST, below, we can see that prices have been trading sideways since August (look for the "8" on the chart) and an upside price target of $226.21 has been reached.
A rally to $240.92 will be bullish and a decline below $215.94 is likely to be bearish.
Bottom line strategy: COST has a neutral trading range but the rising OBV line tells me that buyers have been more aggressive for weeks. After probing the downside a number of times in October and November the path of least resistance for COST is likely to be up. Aggressive traders can approach from the long side.