Enters critical historic $2.30-35 resistance marking low end of $2.30-$3 consolidation region prior to 2007 surge and during subsequent crash with next target at $2.57-66
After nearly a year of consolidation in 2009-early 2010 around $1 to $1.30, followed by a steady climb from $1.50 to almost $2, Cosco staged a good year-end rally to $2.14-19 and another breakout this new year taking in to $2.33 today.
Its overbought condition – 14-day RSI at 74 today with 3-days at 97 and above upper Bollinger band ($2.24) must be viewed in the context of the stock's massive crash from adjusted Oct 2007 peak of $7.86 to 59c a year later.
Despite the gains made in the past 2 years, the counter has just passed the 23.6% Fibonacci mark of $2.30 and still a long way to go to reach the 38.2% point at $3.37.
The $2.30-$3 zone has featured prominently in its chart pattern, having been the minor breakout in first half of 2007 prior to the surge that saw its price more than doubled to $7.86 in Oct that year.
When Cosco subsequently crashed, it stopped at $2.80-$3 in first half 2008 before this support broke and then it held on to $2.30 for a while before all hell broke loose and sank to as low as 59c by Oct 2008.
The long road to recovery finally brought it back to $2.33 high today, more than 2 years since it bottomed out and the grand show of strength in early 2011, climbing from $2.14 at year-end, should lead to test of higher resistances at around $2.60, and later $2.80-$3.
Buying on weakness as stock reacts to overbought conditions and holding the stock for 6-12 months should be a worthwhile investment as the last 2 years had seen 80c and $1 annual movements with quarterly trading ranges of 40c-60c for much of 2010.
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