COSTCO, at support, to trend down with sales report
COSTCO has a history of trading against the market. Often when the market is down, COST is up, and vice-versa. Consider this a divergence making for a better entry.
COST is bumping up against well know support pre/post inflation at around $540.
May same store sales are due out tomorrow afternoon, 7/6/2023 at 1:15pm PDT.
Based on COSTCO's mid-month mark downs of products and increases in discounting from their flyers to the online purchases, they are working to keep revenue numbers up as well as total sales numbers.
COSTCO has recently been checking cards/IDs/applications to ensure the person paying is the cardholder/executive member. I have experienced this in San Antonio, Kyle, and Austin Metroplex.
Bearish and Bullish entries
Bearish, $540/545 CALL CREDIT SPREAD, expecting a trend down after same store sales disappoint beyond the core numbers.
Bullish, $510/515 PUT CREDIT SPREAD, when the trend down begins, expect COST to have support at the $520 range, but look for spread entries at $5 strike lower for added security against broader market moves.
An Iron Condor is possible, but we aren't at a FIB50 for COSTCO, so a put spread would likely lose money as the stock price goes down, so avoid an IC and take spreads OTM as the mark moves.
LEGEND:
Large red arrow points to the last same store sales impact on stock, as well as the trend recovery. COST is generally bullish vs. bearish at this time, and the daily MA cross confirms.
Drawn red box near arrow, is the day the last same store sales results were posted.
COST is bumping up against well know support pre/post inflation at around $540.
May same store sales are due out tomorrow afternoon, 7/6/2023 at 1:15pm PDT.
Based on COSTCO's mid-month mark downs of products and increases in discounting from their flyers to the online purchases, they are working to keep revenue numbers up as well as total sales numbers.
COSTCO has recently been checking cards/IDs/applications to ensure the person paying is the cardholder/executive member. I have experienced this in San Antonio, Kyle, and Austin Metroplex.
Bearish and Bullish entries
Bearish, $540/545 CALL CREDIT SPREAD, expecting a trend down after same store sales disappoint beyond the core numbers.
Bullish, $510/515 PUT CREDIT SPREAD, when the trend down begins, expect COST to have support at the $520 range, but look for spread entries at $5 strike lower for added security against broader market moves.
An Iron Condor is possible, but we aren't at a FIB50 for COSTCO, so a put spread would likely lose money as the stock price goes down, so avoid an IC and take spreads OTM as the mark moves.
LEGEND:
Large red arrow points to the last same store sales impact on stock, as well as the trend recovery. COST is generally bullish vs. bearish at this time, and the daily MA cross confirms.
Drawn red box near arrow, is the day the last same store sales results were posted.
Trade active:
COST performed beautifully on the same store sales data, exited bear calls spreads at the lower lows ~525
COST new entries, this is a bullish stock, so exit call spreads when the stock pulls back. Put spreads -5 below the 525 level could be held as inflation cools and spending possibly picks up.
summary
Play put spreads for the long term
Play call spreads at higher high weakness or ahead of earnings, same store sales, etc.
COST is bullish based on the recent MA cross, so do not recommend going against momentum long term.
COST new entries, this is a bullish stock, so exit call spreads when the stock pulls back. Put spreads -5 below the 525 level could be held as inflation cools and spending possibly picks up.
summary
Play put spreads for the long term
Play call spreads at higher high weakness or ahead of earnings, same store sales, etc.
COST is bullish based on the recent MA cross, so do not recommend going against momentum long term.
Trade active:
COST continues to find higher highs and higher lows. I am not taking bearish positions on COST at this time. It is bullish. On the retracements/pullbacks, I am entering bull put spreads, the strike price is $5 less than the mark at the time of entry. Looking for 2:1 reward to risk, e.g. hold back $1000 to make $2000 at expiration. Scaling exit at 50-75-90% premium returned. Big news up coming is same store sales on 8/3, I expect it to be up especially with back to school on the minds of families.
Trade active:
move up to the weekly timeframe to set a fib retracement that shows the current price action is inline with a retracement. currently bullish on cost taking entering low risk/low probability bull debit spreads.
Trade closed: target reached:
closing out this idea on COST. Last entry is an iron butterfly credit spread after earnings, targeting 575-585 as the exit range. Good luck!