Can Costco Stock Salvage Early 2022 Losses?

COST could benefit from a shift in sentiment

Assistant Editor
Jan 11, 2022 at 1:13 PM
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The shares of Costco Wholesale Corporation (NASDAQ:COST) are flat today, last seen down 0.1% to trade at $518.18, and pacing for their seventh-consecutive loss. Already off 8.5% in 2022, this negative price action comes after Costco stock nabbed a Dec. 29 all-time high of $571.49. The good news is that the pullback put COST near a historically bullish trendline that could help breathe some life back into the struggling equity. 

More specifically, Costco stock is within 2% of its 80-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White, Costco stock has tested support at this trendline eight other times over the past three years. The stock was higher a month later 63% of the time, and averaged a 5% gain for that time period. A move of similar magnitude from COST's current perch would put the equity right at the $544 mark.

COST Chart Jan 11

In the options pits, the preference for puts is apparent, and an unwinding of this pessimism could help put some wind at COST's back. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the stock sports a 10-day put/call volume ratio of 1.01, which ranks higher than 96% of readings in its annual range. This indicates an unusually healthy appetite for long puts over the last two weeks. 

There's plenty of room for analysts to change their tune as well. as five of the 18 in coverage still recommend a tepid "hold." What's more, the 12-month consensus price target of $555.83 is a 7.3% premium to Costco stock's current level of trading.

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