Costco Wholesale Corp. (COST) is up sharply Friday morning after fiscal second-quarter results that beat on earnings per share but missed on revenue despite 7% year-over-year growth. Quarterly membership fees were $768 million. Adjusted comps were up 6.7% for the total company in the quarter with the U.S. up 7.2%. E-commerce comps rose 25.5%.
With those numbers the stock is up to around $225. Let's check the charts.
In the daily bar chart of COST, below, we can see that prices gapped higher to make a new high for the move up and clearly above the rising 200-day moving average line. The 50-day line also has a bullish slope.
The volume of trading today is likely to expand above the pace of recent weeks and the On-Balance-Volume (OBV) line could make a new high for the move up, which would be confirmation for the advance. The daily Moving Average Convergence Divergence (MACD) oscillator is above the zero line which is bullish but the two moving averages had narrowed recently. We would look for the MACD oscillator to widen out.
In the weekly bar chart of COST, below, we should see that prices end the week above the rising 40-week moving average line.
The weekly OBV has been neutral the past two months but a new high would help this chart. The MACD oscillator is crossing upward to a cover shorts buy signal and maybe an outright buy signal soon.
In this Point and Figure chart of COST, below, we have the latest prices plotted with no gap. A price target of $262 is being projected.
Bottom-line strategy: COST has been rallying from its late December nadir and the move does not look like it is over. Stay long and raise stop protection to a close below $214.