Stock of the day: Costco

In today’s stock of the day, let’s take a closer look at Costco, which is showing a textbook bearish reversal pattern.

The large formation marked in yellow on the chart is a classic head and shoulders pattern—a reliable structure in technical analysis that signals a potential trend reversal. We have a clear left shoulder, a head, and a right shoulder, which was just completed two sessions ago.

Supporting the bearish outlook, the price action has already shifted structure, with lower highs and lower lows forming. This shift suggests growing selling pressure and fading bullish momentum. The neckline of this formation, drawn in red, is now being tested.

Another bearish confirmation came earlier, as the stock broke below the long-term blue uptrend line, removing a key support that had held since the start of the bull run.

What’s next? The key will be a daily close below the red neckline. That move would activate the head and shoulders pattern and serve as a strong sell signal for long-term traders. As long as the price stays above the neckline, there’s still hope for bulls—but signs are tilting heavily toward the downside.

If the neckline breaks, we could see a deeper correction unfold in the coming weeks.

Source: https://www.axiory.com/analytics/stock-of-the-day/stock-of-the-day-costco-4