Costco Wholesale Corporation (NASDAQ:COST) became the latest retailer to say that the trade war between China and the U.S. will likely lead to higher prices

Costco Wholesale Corporation (NASDAQ:COST) became the latest retailer to say that the trade war between China and the U.S. will likely lead to higher prices

Costco Wholesale Corporation (NASDAQ:COST) became the latest retailer to say that the trade war between China and the U.S. will likely lead to higher prices

Costco became the latest retailer to say that the trade war between China and the U.S. will likely lead to higher prices, but the warehouse giant says it is taking steps to withstand the battle. 

“At the end of the day, prices will go up on things,’’ said Richard Galanti, Costco’s chief financial officer, during an earnings call with investors. “We’re hopeful the ebbs and flows of the relations between our countries improves in that regard.’’

The Trump administration ratcheted up its trade battle with China this month when it hiked U.S. tariffs on $200 billion in imported Chinese goods from 10% to 25%. The president has also threatened to add a 25% tariff on virtually all the remaining $325 billion in products brought in from China. 

Costco is just beginning to see the effect of the most recent tariff increases, affecting goods like furniture, bikes and luggage

Industry watchers have said that the tariff battle could make items ranging from smartphones to clothing more expensive, and also accelerate the shuttering of stores.

But tariffs don’t always scare off shoppers. Despite the increased import costs, patio furniture has sold well, Galanti says. “It’s hard to predict what the impact will be,’’ he says.

For the quarter that ended May 12, Costco reported it brought in $906 million in net income or $2.05 diluted earnings per share. That was up from $750 million, or $1.70 a share, during the same quarter last year.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 246.37.

The projected lower bound is: 232.89.

The projected closing price is: 239.63.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 3 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 26.9857. This is not an overbought or oversold reading. The last signal was a buy 0 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 40.34. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 36 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -160.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

COSTCO WHOLESAL closed down -1.960 at 239.580. Volume was 106% above average (neutral) and Bollinger Bands were 10% narrower than normal.

Open High Low Close Volume___
238.980 240.660 233.050 239.580 4,058,490

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 246.06 243.91 228.08
Volatility: 15 18 27
Volume: 2,103,013 1,665,273 2,255,903

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

COSTCO WHOLESAL gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
COSTCO WHOLESAL is currently 5.0% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of COST.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on COST.O and have had this outlook for the last 1 periods.

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