Costco Wholesale Corporation (NASDAQ: COST)

Costco Wholesale Corporation operates membership warehouses. The company offers branded and private-label products in a range of merchandise categories. It offers candy, snack foods, tobacco, alcoholic and nonalcoholic beverages, and cleaning and institutional supplies; appliances, electronics, health and beauty aids, hardware, office supplies, cameras, garden and patio, sporting goods, toys, seasonal items, and automotive supplies; dry and institutionally packaged foods; apparel, domestics, jewelry, house wares, media, home furnishings, and small appliances; and meat, bakery, deli, and produce. The company also operates gas stations, pharmacies, food courts, optical dispensing centers, one-hour photo centers, and hearing aid centers; and travel businesses.
Please take a look at the 1-year chart of COST (Costco Wholesale Corporation) below with my added notations:

Over the last 9 months COST has created a key level of support at $110 (blue) and that $110 level is also the “neckline” support for COST’s H&S reversal pattern. Above the neckline you will notice the H&S pattern itself (purple). Rather than just 1 peak, COST’s left shoulder formed a “complex” shoulder with more than one peak.
Remember, patterns such as an H&S need to confirm to have the meaning that they imply. Confirmation of the H&S would occur if the stock were to break below its $110 support.

The Tale of the Tape: COST seems to have formed a head & shoulders pattern. Although a long trade could be made at $110, the pattern implies that the stock might be preparing to break lower. A short trade could be entered on a solid move below the $110 “neckline” support.
Please share this article