Costco Wholesale Corp. (COST) reported comparable sales rose 11.5% in June, beating the consensus estimate for a gain of 4.2%. E-commerce sales were up 85.8% during the month compared to a year ago.
We last covered COST on June 1 where I wrote, " Traders could go long COST risking a close below $300. Go long on strength above $312 and $316."
Let's look at some charts from just before the sales numbers.
In the daily bar chart of Action Alerts PLUS holding COST, below, we can see that the shares declined in the second half of June and should have stopped us out of our long recommendation. Prices traded around the 200-day moving average line several times before rallying to above the early June high. Traders may have used this rally above $312 and $316 to go long but I have no way of knowing that.
COST is trading higher in early Thursday activity and the On-Balance-Volume (OBV) line shows a rise from the second half of June, which tells us that buyers have been more aggressive in the days leading up to Wednesday's sales figures.
The Moving Average Convergence Divergence (MACD) oscillator is crossing the zero line for an outright buy signal.
In the weekly bar chart of COST, below, we see a bullish picture. Prices are above the rising 40-week moving average line.
The weekly OBV line tells us that buyers are more aggressive and the MACD oscillator on this time frame is about to cross to a fresh outright buy signal.
In the daily Point and Figure chart of COST, below, we can see the large triangle-like pattern of prices. The after-hours trading and pre-market activity is not included on this chart. The software was projecting a downside price target but a trade at $321.51 is likely to turn the chart bullish.
In this weekly close-only Point and Figure chart of COST, below, the chart is indicating a potential price target of $354.
Bottom-line strategy: If you are still long COST -- great. If you are aside then look to go long above $322 (I like to buy strength and not pullbacks). Risk a close below $308. The $355 area is our price target.