4 Trade Ideas for Costco: Bonus Idea

• Posted by Greg Harmon
• on July 17th, 2023

Here is your Bonus Idea with links to the full Top Ten:

Costco, $COST, comes into the week breaking above the November high. This continues the price journey toward the target of 809 after the break out of the symmetrical triangle at the end of May. The Bollinger Bands® are pointing higher as price rides the upper edge. The RSI is rising in the bullish zone with the MACD crossing up and positive. There is resistance at 550 and 561 then 565 and 570 before 586 and 607. Support lower comes at 541 and 534 then 530 and 525. Short interest is low under 1%. The stock pays a dividend with an annual yield of 0.75% and has traded ex-dividend since May 4th.

The company is expected to report earnings next on September 26th. The July options chain shows open interest build from 540 to 500 on the put side peak at 560 the 550 on the call side. The August chain has open interest spread from 540 to 500, biggest at 510 on the put side and from 520 (the biggest) to 575 on the call side. In the September chain open interest builds from 550 to a peak at 510 in the puts and spread from 500 to 570 in the calls. Finally in the October chain open interest is focused from 500 to 510 in the puts and spread from 500 to 550 in the calls.

Costco, Ticker: $COST

Trade Idea 1: Buy the stock on a move over 550 with a stop at 540.

Trade Idea 2: Buy the stock on a move over 550 and add a August 540/525 Put Spread ($3.85) while selling the September 580 Call ($3.45).

Trade Idea 3: Buy the August/October 560 Call Calendar ($11.80) while selling the September 525 Put ($6.20).

Trade Idea 4: Buy the October 520/550/570 Call Spread Risk Reversal ($1.15).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into July options expiration, saw that equity markets showed strength moving higher all week until some profit taking Friday.

Elsewhere look for Gold to possibly reverse higher while Crude Oil rises in consolidation. The US Dollar Index broke through support and looks to continue lower while US Treasuries remain in consolidation. The Shanghai Composite looks to continue consolidation as well while Emerging Markets continue a short term move higher.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe the IWM, the QQQ and SPY all broke clear of short term consolidation and have upside room. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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