Is it time to buy Costco?

Costco Wholesale (COST) has seen its share price fall sharply over the past six weeks. Has the price reached a level or area where some far-sighted investors see an opportunity? Let’s check.

In this daily Japanese candlestick chart from COST, below, we see a falling window (gap) and large red (bearish) candle before today’s spinning top pattern where bulls and bears are in close balance. A bullish or white candle on Friday could complete a downward contrasting pattern. Trading volume was very heavy on Wednesday and could mark a “towel throw” event.

The 12-day Price Momentum Study shows a low which is a bullish divergence when prices are low. The fast stochastic index sells well but may soon be reversed.

In this daily point and figure chart of COST, below, we can see that the prices have reached the downward price target of $ 424. Reaching a price target is not a strong reason to be a buyer but it can improve your odds when combined with other sources.

Bottom line strategy: Its a regular reader Real money I should know that I am not inclined towards buying falling knives but this one is interesting at times. Aggressive traders can go to current levels at a long cost. A new low-off risk.

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