SIA Chartsā relative strength rankings help investors identify opportunities in stocks which are outperforming their peers or index benchmarks on a relative basis. Outperformance often reflects improving investor expectations for strong company growth.
Today, we are going to look at Costco Wholesale Corp (COST) which we last commented on in the September 29, 2023, edition of the Daily Stock Report. After flirting with the bottom of the Green Favored and top of the Yellow Zone last Summer the shares finally entrenched itself back in the Green Favored Zone of the SIA S&P 100 Index on September 26th of last year at a price of $552.96. The shares have remained in the favored Zone ever since and the closing price of the shares is now at $856.84 representing a 54.9% price increase in a little over 9 months time. In contrast, the S&P 100 Index is up 32.70% in the same time frame representing almost double the increase in the index benchmark. Yesterday, COST finished in 6th position, up 3 spots on the month and up 4 places in the last quarter.
In looking at the attached Candlestick chart of Costco, we see the shares firmly in accumulation phase from 2019 up until the Spring of 2022. Then a short period of distribution followed as a sideways trading pattern emerged from that point until December of last year. During this time period you see a steady pattern of higher lows emerge prior to its breakout last December. From that point the accumulation phase reasserted itself with only a slight pullback earlier this spring and then another move to the upside materializing. Currently, we see the shares in the mid $800 level. Support can be found at a round number of $800.00 while resistance is at $920.00 based on a measured move.
In the attached Point and Figure Chart at a 2% Scale, we see the shares in a sideways consolidation pattern from December 2021 to December 2023. Then in late December the shares eventually broke out of this sideways range and charged onto higher highs confirming the accumulation phase has commenced. The shares pulled back in April into a column of Oās representing 5 boxes only to see the shares regain its footing, reversing back into a column of Xās, and establishing a new higher high earlier this month. Currently the shares are approaching near term resistance at $894.35 based on a measured move and, above that, the $1000 psychological resistance level. Support is at its 3-box reversal of $794.15, and below that, the $691.36 level. The shares currently still exhibit at bullish Double Top pattern. With a bullish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 10 out of 10, COST is exhibiting short-term strength against the asset classes.
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