COST had a positive catalyst and broke out of a daily range. It had a very strong opening drive and quickly formed a wedge during the open. This wedge broke out and before 11AM COST was already up almost 2.5ATR move. This seemed very extended, but we got a HTF Trend PB that closed near HOD because the overall market was trending as well.

1. D1 Catalyst – Trend
day
Catalyst: YoY revenue increase
Setup: D1 catalyst – Trend day
Trades: Wedge & HTF Trend PB
Ticker: COST
Date: 6-1-23

2. Bigger picture: SPY trend day and VIX
SPY Trend
SPY traded down in the
open and then completely
reversed. It made just over
1 ATR in the morning,
consolidated below high of
daily range, and broke out
in the afternoon. Made
about 1.5ATR move.
VIX level : >20
High volatility environment.

3. Catalyst &
Fundamentals
Catalyst: Costco reports December sales reports. They have a 7%
y/y revenue increase compared to last year. Last year COST was
trading about 17% higher.
Setup: D1 catalyst.
Float: 441 million.
Institutional Ownership: 69,1%.
Short %: 0,95%
ATR: 8,61
Average Daily volume (50 day): 2,2 million.
Daily volume: 5,2 million.
Gap%/Gap ATR: 2% / 1ATR
RVOL: > 3

4. Key levels
Support:
Resistance:
365 is the infliction level. Holding
above this level on volume could
really mean we have strong
bounce.

5. D1 Catalyst
Trend day –
Trade Strategy
Stock selection
-Stock in play with a significant (technical) catalyst, earnings report or strong theme.
-Elevated RVOL above 3.
-Strong move from the open (0.75ATR move) OR exceptionally strong volume during open.
Trend day factors
- Holding above significant support level: HOD1 8/10 importance level.
-Strong market, holding the lows in an uptrend.
- Market trends intraday and in breaking important levels. Especially for a high beta name as COST, a
trending SPY is important for a close near HOD.
-Strong catalyst: 7% increase of revenue yoy on December sales results.
- Elevated RVOL
- Room to trend on the daily. Broke out of a range formed after a down trend.
- Strong open through resistance (8/10): 365.

6. Technical Analysis: Trend days
Price history shows
strong trend days,
also directly after a
down trend.
Stock can make big
moves, even if it’s
not a large volume.
These were all days
where SPY closed
really strong as well!
Gap ATR ATR move C - H in ATR
0,43 1,11 -0,17
-0,45 1,03 -0,21
0,20 1,74 -0,18
0,32 1,63 -0,11
-0,16 1,52 -0,24
-0,070 1,33 -0,1071704
0,255 1,26 -0,076523

7. SPY HOD close, correlate with COST trend days.

8. Wedge Pattern Trade2hold – Trade Management
Trade2hold - Flat
Significant 5m close below 20
EMA:
1) close on above average
selling volume;
2) a new 5m low that occurs
after close;
Goal: don’t sell more than
50% when going flat.
Trade2hold – Exit strategy
ATR moves: 1,5ATR, 1,75ATR,
2ATR.
Resistance level: HOD1
No volume on the wedge
breakout:
-Lighten up position.
-Move stop to break even.
Wedge pattern- Entry
Entry: First higher low
Risk: consolidation low, otherwise
pattern has failed.
Add: When price starts to break
out of tight pattern on volume.
Risk: Move stop to low of the
breakout.

9. Technical
Analysis:
Wedge pattern
Break through resistance: daily
range
Wedge visible on multiple
time frames.
Low volume in consolidation.
Elevated volume when price
breaks out of wedge.
Pattern with higher lows and
lower highs. Tight pattern!
Holds above premarket/
opening range high.

10. “Extended” Trend PB - Trade2hold – Trade
Management
Trade2hold - Flat
Significant 5m close above 20 EMA:
1) close on above average buying
volume;
2) a new 5m high that occurs after
close;
Goal: don’t sell more than 50%
when going flat.
Reason2hold
-Shallow volume and making lower
highs. Sometimes the trend is still
intact when there’s a significant
close above the 5m 20EMA.
Trade2hold – Exit strategy
The probability of a trend day
is very important. We are
extended here.
Wil we just have a bounce
trade or are we going to
close near HOD?
Trend PB
Entry: After price pulled into 5m 20 EMA
and after a top has formed on tape:
-We can’t trade lower.
-Tape starts to get stronger.
-Bids are stepping up.
-Stronger offers get taken out.
Risk: At the bottom of the pullback.

11. Technical Analysis:
“Extended” Trend
PB
Extreme >2ATR move during
morning
Shallow volume during PB
Pullback visible on multiple time
HTF frames: 5m, and 15m.
Bounce of key level:
Elevated volume when PB
starts to work.

12. Trend Day
5m holds above 20EMA
10m holds above the 9EMA
Constant shallow volume all day
long.
Close near HOD.
SPY also trends.

13. What could I have done
better?
• For high beta stocks, the overall market or a specific ETF is a very
important indicator if we might trend all day and close near the
HOD. I will need to be more specific during the premarket in my
gameplan whether this is more likely. I will set alerts for levels that
are important for the overall market.
• I need to be more aware that if a strong ticker had a very strong
open of +2ATR, it could still bounce. But the bigger picture is more
important. I want to see PB’s visible on higher time frames. And I
need to manage these trades differently, and be ready to sell for a
lower high that isn’t able to break HOD.
• On strong tickers, I need to go for a trend day checklist. I want to
check whether we have constant shallow volume during the day,
what the large time frames (10m and 15m) look like and whether
the overall market is trending.