Chart of the Day: Costco Bulls Not Showing Much Zest Ahead of Earnings

Usually when a company like Costco (COST) gets ready to report earnings the market crowd starts getting enthusiastic. We’re not talking the customer excitement over a $1.50 hot dog and a soda, but clearly the company has big interest, being one of the most widely held names in retail.

A recent push higher was rejected by the bulls after a very convincing move up. Perhaps the last of the buyers were trapped in the stock at all-time highs and are now hoping for a positive response to earnings. That may not be in the cards, though.

The stock often has big moves up or down after earnings, so one could understand a trader’s hesitancy to buy Costco right near all-time highs. As long-term investors of the company, we understand this and look for the dips to add more shares if we are fortunate, which is not often as the stock does not give you much of a chance to get in at lower prices.

The technicals have retreated from a bullish stance. The MACD (moving average convergence divergence) is on a sell signal but that is not alarming. The recent surge up in the price has been corrected, money flow is down but remains positive, and the parabolic SAR (stop and reverse) in the top pane is bearish. Further, the candles have turned amber, which is neutral on the GoNoGo composite of indicators.

While we believe Costco will once again deliver strong results after the close Thursday, there is the potential for a quick drop afterwards, which might set up a good chance to add more shares.

We like Costco in TheStreet Pro Portfolio and rate it a One, or “buy at anytime.”

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At the time of publication, TheStreet Pro Portfolio was long COST.