Costco Wholesale Corporation (NASDAQ: COST)

Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. It offers branded and private-label products in a range of merchandise categories.

Take a look at the 1-year chart of Costco (NASDAQ: COST) with the added notations:

1-year chart of Costco (NASDAQ: COST)

COST has a key area of support around $217 (green). The stock looks like its making its way back down to that level again, and if so traders should expect some sort of a bounce from there. However, if the $217 support area were to break, lower prices will likely follow.

The Tale of the Tape: COST has key support at $217. A trader could enter a long position at or around $217 with a stop placed under the level. If the stock were to break below the support, a short position could be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT