Let’s Revisit $COST

My last post on $COST was here. In that post, I identified a near textbook bearish wedge that had developed. And unfortunately, that wedge never broke down and the stock rallied to new highs.

That new piece of information is telling: why didn’t the bearish structure break down?

Answer: the market may not be as bearish as we were expecting here. Given the potential for the markets as a whole to break up sharply here, we can reinterpret the structure on this stock as a large inverse, with the right shoulder probably complete.

Should this break up sharply, the target for this is over $700. We would like to see this “right shoulder” stay close to or above the “left shoulder.” Falling below the 12/2 low will begin to cast doubt on the interpretation.


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