Chart of the Day: Don't Overlook Costco Now

It is hard to get a good read on Costco (COST)  right now. The chart is clearly not bullish but we also realize this is the time of year when the stock really starts performing well.  

In past years during the holidays Costco has been chased after for weeks and we have seen new all-time highs reached during this period. Yet, something seems to be lacking in this retailer. 

Perhaps it is the tariffs or slowing consumer spending, but the stock just seems to be floundering. However, if the current base is strong and the $900 level holds, this is an ideal spot to add more shares.

If you wanted to find a silver lining in the chart we would say the stock has not been in a downtrend for the last couple of months.  Costco has simply been moving sideways, building a long base above $900 that will eventually be broken. 

We like the long-term prospects of Costco, so perhaps this pullback from the May highs was warranted as the stock moved too high.  That happens from time to time, as investors adjust their positions and the stock finds some sort of equilibrium. That is where we are at with Costco.

The technicals are not bullish right now but are somewhat oversold. If the stock remains trading in the box above, we could see more sideways action and no response from the indicators. A move above $950 confirmed gets Costco moving to the upside quickly. We'll be watching stochastics and moving average convergence divergence (MACD) for the first signs of life.

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.