Predicting Costco's Trading Action Heading Into Its Q2 Earnings Report

Costco Wholesale Corporation COST is scheduled to report its Q2 earnings results Wednesday after the bell. The grocery warehouse is expected to report Earnings Per Share of $1.46 EPS on revenue of $32.68 billion. They'll also be releasing their February retail sales figures. 

If recent history is any indication, the numbers are going to come in higher than the estimate. Costco has not missed an EPS or revenue estimate since its Q2 2017 report one year ago. The stock initially dropped after that report but is up over 12 percent since. 

Costco had previously reported net sales for January increased 8.4 percent year-over-year. Comparable sales, which only includes sales for stores open for more than a year, increased 6 percent in January on a year-over-year basis. 

Predicting How The Stock Will Move Heading Into The Report

Shares of Costco have largely moved inline with the rest of the S&P 500 in 2018. The stock dropped 12.5 percent from all-time highs in early February, but has since regained over half of those losses. 

Looking at the VantagePoint indicators, we can see that the stock is in a solid uptrend. The two lines on the chart below, the black 10-day simple moving average and the blue predicted moving average line, crossed over on Feb. 16.

The chart show's Costco's price action over the last three months. Each candle represents one day of trading.

The blue line is a predicted measure of what Costo's 6-day moving average will be three days from now. As long as it stays above the lagging 10-day simple moving average line, that indicates a bullish trend. Note the gray candle at the right end of the chart. That shows the predicted range for the next day's trading—in this case Tuesday. VantagePoint is predicted the stock will trade between $190.28-$193.40. 

The red-green Neural Index bar at the bottom of the chart has shifted to green, indicating that Tuesday's price action will likely be higher than Monday's. 

Costco opened for trading at $192 on Tuesday. 

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