During Friday's Mad Money program Jim Cramer told viewers he will be waiting to see quarterly results from Costco Wholesale (COST) this week. We shop at Costco regularly, but the last time we looked at the charts was back on July 9 where we wrote that, "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."
Prices have reached and exceeded our target price so let's see what the charts look like today.
In the daily bar chart of COST, below, we can see that the shares reached our price target by early September. Prices corrected down to the rising 50-day moving average line and then rallied to new highs in October and November. The rising 50-day moving average is being tested now. We can see other tests in late October and early November. The 200-day moving average line is rising and intersects down around $330.
The On-Balance-Volume (OBV) has moved higher from June but with periodic corrections. The 12-day price momentum study shows weaker momentum readings from October to November/December even though prices have made higher highs. This is a bearish divergence and tells us that the pace of the rally is slowing. This can be a "heads up" for a possible downside reversal or correction.