Looking overbought going into the earnings

Costco, another big player who is reporting earnings this week as it will provide insights for investors on the state of the US economy and consumer spending going into H2 of 2024. The retail giant’s stock closed last week with a share price of $809.67 a share. With Nvidia announcing a stock split last week and Walmart at the start of the year, it is possible that Costco could be considering of taking similar action. However, this is of course only speculation and not guaranteed. Also, the near-term direction of the stock’s price is not always determined by the news of a stock split. Nonetheless, from a technical perspective, the stock now seems to be overbought in our opinion. It is once again trading at all-time highs after conquering the resistance of $786.81, creating a higher risk for investors as there are no clear resistance levels above. Heading into the earnings, it is important to be aware of the support below. It can be argued that there is support at the low point of the week that began on the 13th of May, which was $771.39. A break and close below this level would certainly increase the likelihood of a sell-off lower, perhaps taking the stock’s price towards the trendline support. The support along the trendline currently reads $746.30. Looking at the technical indicators, they are suggesting overbought conditions. The MACD has moved lower but the price of the stock has moved higher, this may be an early indication of a bearish divergence. But it’s not always the case. The RSI is now reading 76, also overbought.