Costco profit dip: two levels to watch

Costco profit dip: two levels to watch

Costco Wholesale (cost) It fell about 3% on Friday after earnings were reported Thursday after the close.

It simply merges with the Red Sea that we have in the stock market today.

The warehouse club retailer was the best performer, with revenue growing 15% year over year. Moreover, same-store sales grew by 13.7% globally and 15.8% in the US, while e-commerce sales increased by 7.1%.

Though, like other retailers, Costco’s profit margins came under pressure as inflation took hold of the bottom line.

Costco is the go-to stock for the bulls. However, they are not immune to sellouts.

In graphs, I have two important areas that I’d like to take a closer look at.

Costco stock trading on earnings

Costco stock made a sharp rally away from its May low, rising nearly 40% to its August high. At one point, the stock surged in six straight weeks.

But now all those gains are reversing.

When it comes to support, the first area of ​​interest is $467 to $470. In that area, we have a 61.8% retracement and a major support/resistance pivot. Both observations can be seen in the above chart.

If this level fails, the $440-$443 area will be of interest. This is where we find the 78.6% retracement and the level of that I was Closing a gap, but hitting a July low that kicked off the massive six-week rally noted above.

What happens if both levels fail as support?

Given that we are in the midst of a bear market, anything is possible. If Costco stock breaks below those two levels, it could open the door down to the $400 region.

Just above $400, we have a 2022 low, as well as a monthly VWAP metric. If we break this area, it could trigger the $390 breakout area.

If Costco stock can reverse course soon, watch for level filling from this morning, up at $494. Above that figure puts $500 and the 10-day declining moving average plays a role.

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