Chart of the Day: Costco Should Defy the Odds Once Again
Retailers are taking it on the chin, but this stock is poised for a test of the highs later this week after releasing its earnings report.
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Without question, retailers have been challenged. Look no further than the retail exchange-traded fund RTH and the consumer discretionary fund XLY, which have now stalled and have shifted gears downward.
No doubt pressured by sellers who are concerned about the consumer and new trade policy, retail stocks have been the focus of late. Right there in the cross hairs is Costco COST, the big warehouse retail name that has always defied the odds when a bet was made against the consumer.
Recent trends as shown in the chart below tell us the stock is moving sideways in the upper end of the range. That is bullish, and with a potential catalyst in front (Thursday earnings), we could see this stock lift to new highs following the report.
The Moving Average Convergence Divergence, in the second pane, remains on a buy signal, and while money flow, in the bottom pane, and momentum have turned lower, one could argue these moved downward due to the stock just moving sideways.
Clearly the relative strength is not positive here, as the market is performing much better, but that may change.
We like Costco in TheStreet Pro portfolio and rate it a Two, or "stockpile on pullbacks."
The Pro Portfolio is long COST.
