Shares of Costco Wholesale Corp (COST) have been steadily declining within the relative framework of the SIA S&P 100 Index Report, where the shares are currently positioned in the red unfavored zone at spot #80. What is equally troubling is that, even with a relatively low standard deviation of 6.35% (safe harbour), the stock appears to be under distribution, as investors may be increasingly concerned with price-to-earnings readings in the high 40s versus its long-standing, dependable grocery store appeal. In that vein, COST is a member of the SIA Food and Beverages Sector, which itself is ranked as unfavored within the SIA Sector Report, providing yet another negative backdrop for the stock.
From a performance standpoint, shares of COST are down 5.61% year-to-date and 12.35% over the past six months, contrasting a five-year performance of 19.75%. Said another way, COST appears to be losing the powerful momentum it carried in the past. Another chart that illustrates this lack of relative performance is the attached COST vs. SIACSH comparison, which shows COST shares breaking down against even the most basic investment alternative, cash. It is worth noting that this comparison is only one of four used to determine the SMAX reading, where COST currently has a score of 0 out of 10.
Turning next to the point-and-figure chart of COST, support and resistance levels have been drawn using the two red lines shown. The first red line represents the 3-box reversal level at $941.49, while the upper line marks all-time high resistance at $1,060.27. Support is initially identified at the $787.79 level, with an additional support level drawn at observable support on the chart at $685.82. Also overlaid on the chart is the color coding from the SIA matrix position tables, which highlights the significant move COST experienced the last time it was in the favored zone of the SIA S&P 100 Index, as well as its gradual fall from grace on both an absolute and relative basis. As prices slipped, the stock moved from yellow (neutral) into green (favored) as it attempted to take out the all-time high, only to reverse, put in a lower top, and subsequently fall back into the yellow and ultimately into the red (unfavored) zone of the report.
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