Costco Wholesale (COST) breaks short-term resistance

Costco Wholesale Corp. engages in the operation of membership warehouses. The firm’s product categories include food and sundries, hardlines, fresh foods, softlines, and ancillary. It operates through the following segments: Unites States Operations, Canadian Operations, and Other International Operations. 

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

Chart of COST provided by TradingView

COST had formed a short-term level of resistance at the $560 (blue) mark. The stock had tested that area twice over recent weeks and finally broke above it yesterday. The stock should be headed higher, overall, from here.

The Tale of the Tape: COST broke a key a level of resistance at $560. A long trade could be entered now, or on a pullback down to the $560 area, with a protective stop set below the level of entry.

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 

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