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COSTCO WHOLESALE CORP (COST) - September 29, 2023

Continuing a steady climb up the rankings in the SIA S&P 100 Index Report which started back in January, retailer Costco Wholesale Corp (COST) has returned to the Green Favored Zone for the first time since November of 2022. In the last month, COST has moved up 4 positions to 23rd place.

Discount retailers in general have been gaining relative strength recently with Walmart (WMT) moving up 8 places over the last month to sit one spot below Costco. In Canada, we highlighted Dollarama* (DOL.TO) in the September 18th edition of the Daily Stock Report. A major breakout is underway in Costco Wholesale (COST) shares. A positive earnings report has attracted significant new interest sparking a rally on volume that formed a Bullish Engulfing candlestick on Wednesday which also successfully tested a trend support line, establishing another higher low.

Yesterday, Costco built on that upward momentum, closing at a 52-week high and completing a bullish Ascending Triangle breakout to signal the start of a new up-leg. Based on a cluster of measured moves, a previous peak and a round number, initial resistance appears in the $600.00-$610.00 area, followed by $650.00. Initial trend line support appears near $545.00.

*Shares of Dollarama are held in some portfolios managed by SIA Wealth Management.

Back in July, Costco Wholesale (COST) broke out of a Symmetrical Consolidation Triangle, signaling the start of a new up-leg within a long-term uptrend. Since then, the shares have continued to climb, completing two bullish Spread Double Top breakouts, including one this week, on their way to their highest level since the spring of 2022.

Initial upside resistance may appear at the April 2022 peak near $606.50, just above the $600.00 round number, or near $683.05 based on a horizontal count. Initial support appears near $517.65 based on a 3-box reversal and a retest of a significant breakout point.

With a perfect SMAX score of 10, COST is exhibiting strength across the asset classes.

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