$COST CALLS$COST has broken structure on the daily and has tapped into a OB on friday might have missed the initial entry but is still looking good for a big move up.
CTO trade ideas
$COST with a Bullish outlook following its earnings #Stocks The PEAD projected a Bullish outlook for $COST after a Negative over reaction following its earnings release placing the stock in drift C with an expected accuracy of 66.67%.
COST New Trade > Naked Put
New Trade $COST
Naked Put
Strike $370
Premium $1.16 x 2 contract = $232.00
Costco’s shares have topped out Given historical data since 1987, Costco stock has performed quite well except during extreme events such as recessions and the market turmoil. Although stock kept its bullish momentum since 2009, it finally topped out at 612.27 in April 2022.
The top pattern made during 2022 poses a threat to the long-term secular trend. The rising trend that stock has enjoyed over the past 12 years is clearly faded away after making a series of failed upward moves since Dec of 2021. The top formation suggests that price may slip to a supporting area between 377 and 394 followed by a rebound toward a range between 520 and 567.
Base case scenario implies that Costco’s shares might be trading within a wide range between 377 and 567 (Average price of 472) throughout 2023. If price is unable to hold above 377, it is likely a worst-case scenario is in play. Worst case scenario points to a decline toward 290 level.
Costco (COST)..Even a bear finds something to buy on a dipThis is a follow up to my recently written note on COST.
The company reports earnings tonight after the close.
The November same-store-sales data released on 12/1/22 rattled markets when it came in below expectations and reinforced those who feared that COST's strong sales throughout '22 were driven largely by the cheaper gasoline available at COST stores. They opined that cheaper gas attracted shoppers and now that gasoline prices have come off their highs, the reduction in traffic on the gas lines would result in fewer people buying at the stores.
Reasonable concern.
Add to that the product mix of consumers, stepping back from higher-margin technology and clothing items, and instead, spending money on lower-margin necessities such as food and other staples, a fate well known to other big-box retailers such as Target (TGT) and Walmart (WMT).
Collectively, enough evidence of a change in fortunes to warrant, or at least put into question, the seemingly rich P/E it's maintained all year of close to 40 +/-, well above its five year average p/e of 36, and meaningfully above most of its competitors other than WMT who has hovered in the mid 40s!
That rich valuation has been justified by lovers of the stock since COST has maintained an exalted status of being among the few seemingly 'recession proof' stocks out there. In hard times, people will continue to look for 'value' especially in non-discretionary purchases that must be made.
The recent selloff ahead of tonight's earnings appears to be pricing in the nasty November sales miss plus anticipated more of the same.
While my previous posts have highlighted my overall bearishness on the equity markets, COST is among the few names that I've been buying on dips, today's included. I think the value proposition is exactly that: value! Heading into what I believe will be increasingly difficult times for more and more Americans, all levels of income and wealth (well, almost all) are likely to step down a notch in terms of how much they spend, on what it is that they spend, and where they actually spend. COST ought to be a beneficiary of more shoppers as times get tougher.
On their supply side too, there's reason to like COST. Being the behemoth that they are, their ability (and willingness) to pressure suppliers to keep prices down and to make them absorb more of the margin squeeze ignited by inflation is quite strong.
Finally, on word on the chart. COST Is testing the lower bound of a flag pattern driven my momentum (MACD) that has rolled over hard, enough to put RSI close to oversold. The degree to which the lower bound holds as support...or not...will determine the pace of my interest in further accumulation.
We'll know more tonight after the bell.
But even on a disappointment and a subsequent fall in the stock price, unless there's some drastic change in the overall story, I believe COST is well positioned to withstand the upcoming likely economic rout better than most.
Again, this is NOT advice!! It is merely food for thought and discussion.
Comments welcome.
COSTCO - BEARISH SCENARIOCostco is set to report its fiscal first-quarter earnings Thursday after the market close.
The company experienced cooling sales in November as shoppers spend more cautiously amid news of increasing layoffs and stubbornly high inflation.
Also, In the near-term future, Costco may face margin pressure from elevated supply chain costs (retailers have been receiving inventory earlier than expected), greater promotional activity, and higher wages.
The short-term expectations are for a breakout of the triangle and a target of $ 450.
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COST - Short IdeaDiamond Reversal
Head & Shoulders Reversal
3 Falling Peaks
Below an Iceline
Wedge-Ception ( 4HR Rising Wedge , Lots of White Space, Less Weight -> 15Min Rising Wedge )
Costco... Cleanup in Aisle #7 ?
Here is a Costco trade (short or position flatten), I am looking at.
We have an intersection of 2 harmonic sell patterns. (A Gartley and a Shark)
(Note: I would feel more certain/comfortable of these patterns, if point X originated off the August 2022 high.)
I have marked my most probable reversal area ($531-$534) and a stop above this level.
As always I want some momentum behind my trades, so my entry is around the $522 area.
Additionally I want my momentum indicator (bottom panel) to firmly roll over.
So 2 conditions must be met.
2 Targets are marked.
This is a 4 hour chart.
So I am just watching now for an opportunity which Mr. Market may or may not give me.
Not investment advice. Do Your own Due Diligence.
I will update as needed. Earnings are early December.
Good Luck
S.
Costco (COST)...Not so teflon coated afterall...COST reported same-store-sales (sss) for Nov that fell short of expectations, largely on consumer spending shifts away from electronics (high margins) and more towards staples and necessities (food...relatively low margins).
COST has been a 'recession proof' favorite of the market for some time which makes today's disappointment likely to meet with continued selling off the opening 6% drop. The 50dma is slightly below current levels and ought to be support, but many may recalibrate the 'recession-proofness' of COST and determine that more valuation extraction is needed.
Before jumping to that conclusion, however, I'd urge a recall of the pricing power that COST has given its largesse, not just with the buying consumers, but more importantly, with its suppliers! The consumer spending pattern shift might dent margins some, but probably not as much as it might with a smaller retailer with less clout on forcing suppliers to cut costs. Further, COST's fee-based business, which hasn't been raised of late, could easily be ratcheted up a bit without losing too many (any?) customers, much like when AMZN raised its Prime membership fee.
I see this as a 'buy on dip' opportunity (and I did).
That's NOT advice in anyway, but simply food for thought and discussion.
I'd also note that on the chart, COST was just breaking out to the upside of a flag formation and an historical 'swing zone' when these numbers hit. The 'swing zone' just below that is being tested now (roughly 500-505) along w/the 50dma below will be key to watch for a bounce...or not!
Eager to hear other opinions!
Bullish bias to continue COSTCOLook at these beautiful pattern to continue
I wil not short the last cipher pattern but look for a reaction
Costco is a good market indicator so use this as conflunce on other trades!
Costco looks great for a BUY - NOT Cup and Handle has formed on Costco and the system has lined up beautifully for a long with a target of $587.65.
However, no trade will be taken according to the system as there is a GAP in the pattern.
Gaps close 70% of the time... It might work out but through my experience, gaps close shortly after (which is where the stop loss would more or less be).
WARNING: Gap - No trade
ABC BullishEL is 467.50
Gap below price.
Possible M pattern forming with peak 2 higher than peak 1 but too soon to know. If true the pattern could take this down a notch or 2.
Folks get nervous closer to earnings and long entry level can be crucial.
There is also in a Symmetrical triangle in this chart and the red resistance line will have to be broken to reach all targets.
Prior Head and Shoulders but price is above the neckline of 469 so the neckline is support for now (targets to the left in orange type for this pattern)
Possible stop under C.
No recommendation.
ABC and target is D.
Earnings 12-8 AMC.
Short interest is low at around 1%.
Price opened (top of red candle) at close of yesterdays candle (top of green candle) but so far today the bulls have been unable to keep price at yesterday's close and at this moment, price is drifting downward.
COST, Another clean short set up !COST is offering another clean short set up.
After proposing a beautiful and profitable Quasimodo pattern , COST reached to our first proposed take profit target ( See Related idea for details). After hitting our target , COST started a rally which is beautifully an abc form of counter trend correction . This abc form counter trend correction hit 0.618 retracement level of previous decline . Mentioned previous decline which was our short position is beautifully 12345 leg down therefore in terms of Elliott waves, every thing is it's right place to go short.
Moreover, stochastic indicator is in overbought zone in daily time frame which may be a good signal for possible trend reversal.
Please note two cluster of Fibonacci levels can be seen on the chart. COST has reacted well to first cluster which also nicely coincides with down trend line shown on the chart. This down trend line is a valid one since it has 3 rejection in it's history and yesterday hit might be the 4th rejection.
Trade set up and information were also added to the chart. Please note that besides all these bearish evidences , our proposed set up may not go well therefore I kindly ask you to set stop loss carefully . As explained on the chart, if you can tolerate more risk it may be a good idea to set stop loss higher at 565 USD. Our take profit targets show our Reward to Risk Ratio is extremely high so I think it is good to take the risk.
Good luck and wish you continuous profit.
$COST Short Idea - First target 465Market has been rallying but today seemed suspect and pop in VIX implies smart money possibly hedging under the hood.
Time to start looking for hedges / short opportunities , whether we get a large move down or just a pullback before going higher, IMO in the near term we see some selling.
Costco is at trend line resistance and therefore I see it as a good hedge/ short candidate. Also at the top of the BB , implying as a mean reversion trade we at least see 495, with 465 being the max profit taking level for me.
For the less risk adverse can trade a 525/530 call credit spread or a 525/520 put debit spread, although all out short / long put is also an option ... I'm looking at DEC opex.
Cheers - Frisco
Head and Shoulders/Symmetrical TrianglePrice is above the neckline which is strong support.
The triangle is neutral until broken.
Earnings 12/9. Analysts numbers are softer than last quarter.
Short interest is low at around 1%.
No recommendation.
Upcoming Quarter's Earnings
Announce Date
12/9/2022 (Estimated)
EPS Normalized Estimate
$3.14
EPS GAAP Estimate
$3.14
Revenue Estimate
$54.87B
EPS Revisions (Last 90 Days)*
UP-7 Down-6
COST (COSTCO) massively bearish head and shoulders patternCOST (COSTCO) has formed a massive head and shoulders pattern over the past year, which seems like a no-brainer opportunity to get short.
COST could possibly reach 440 by the middle of October and 407 by the first week of November if the price breaches the neckline around 464. A period of consolidation could delay these estimates by several days.
Disclaimer: I am not a financial advisor, and the above statements are not investment advice. My comments are only intended for educational purposes. You are solely responsible for your own trading decisions.
COST bearish 10/20/22COST is currently trending in a rising wedge pattern and it's looking like it's coming to an end soon.
Further analysis and supporting technicals are annotated in the chart.
COST daily bullish hammerOrder BUY COST NASDAQ.NMS Stop 473.44 LMT 473.44 will be automatically canceled at 20230401 01:00:00 EST
COST daily bullish hammer with RSI divergence gotta be quick 1.2R countertrend.
Head and Shoulders Price is below the neckline of 469.
Retests of the neckline are common.
Price is breaking the support line of a symmetrical triangle.
Targets in orange type.
No recommendation.
This pattern is valid when the neckline is broken as it is a strong source of support. The right shoulder or 1st shoulder represents a strong uptrend that pulls back as trends often do. Then the head is formed with another surge of momentum and a new high is reached. Once more the stock pulls back and those who have missed out buy the pull back. The last shoulder can represent FOMO (fear of missing out) but is also a good time to sell your position if you got in during the head formation. The left shoulder should be in the same ballpark price wise as the right shoulder but rarely are they the same exact price.
Bearish engulfing candle today.
No recommendation.
Don't lose your shadow.,
COST: Head and Shoulder Pattern!Classic head and shoulders pattern. Expecting ~20% drop, coinciding with broader economy and stock market "waterfall" downturn.
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