Stocks on Tech Trader

Summary: Hold the short position on COST as it persists in a downtrend with EMA below SMA, price below both without volume capitulation, targeting $856 support despite recent volatility and no immediate bullish news. Technical indicators support this: MACD is negative at -4.42 with a signal of -4.06, indicating bearish momentum, though the histogram is narrowing slightly; RSI at 48.95 is neutral, not oversold, suggesting room for further downside; Stochastic shows %K at 29.01 and %D at 29.18, not yet indicating a strong buy signal. Key support levels include a strong one at $856 (strength 3, last tested 148 bars ago) as the target, with a rising support trendline at $911.20 recently tested, where price bounced but remains below resistance at $943 (strength 2, tested 1 bar ago) and higher at $962.54; resistance falling trendlines around $938-950 reinforce the bearish channel, and the stock is trading near the lower Bollinger Band at 906.72, potentially pressuring toward support.

Fundamentally, Costco's strong membership model and retail resilience are noted, but recent earnings history shows mostly negative post-reaction moves (average -3.2% over last four quarters, with only one positive surprise not meeting the 7% threshold for holding longs), and no major positive catalysts like exceptional sales growth appear in searches; instead, broader economic pressures such as potential inflation or consumer spending slowdowns could weigh on retail stocks, indirectly bearish for COST through reduced discretionary spending, even if not yet realized in headlines. Unusual options activity scans show mixed flow with some put buying, but no overwhelming bullish sweeps; insider activity is quiet, with no recent filings indicating buys; social media and discussions on platforms like X reveal neutral to bearish sentiment, citing overvaluation concerns amid market uncertainty, though I disregard direct recommendations. No rumors of M&A or events alter this, and world news like ongoing supply chain issues or geopolitical tensions might indirectly pressure costs, supporting downside.

Simulating based on history: Similar downtrend setups in March 2025 saw sharp drops post-earnings weakness without capitulation, leading to 10-15% declines over weeks, while the August 2025 bounce (covering a short at loss) was triggered by strong sales news absent here; past trades like the July 2025 short loss remind to avoid early exits on temporary bounces, as win rate on comparable multi-week shorts exceeds 50% when targeting established supports without intervention; potential whipsaw checked—recent false breakdowns below $910 rebounded but didn't sustain above EMA, invalidating quick longs, so holding short avoids chasing noise. Overall, risk/reward favors maintaining the short from $911.45, expecting a move to $856 over the next weeks, with exit only near support or confirmed reversal, not on unclear trends.

Next earnings date is 12/11/2025; no other event catalysts within the next 3 days.