Costco stock rallied more than 2 1/2 percent to close Monday's trading above $1000. The clothes above $1000 is the first ever for the warehouse retailer.
In December, Costco stock capped a 15% rally that started at the beginning of November. That rally was halted by the round-numbered psychologically significant $1000 price mark. Historically, it is normal for a stock or index to exhibit support or resistance at round numbers.
That resistance in December resulted in the stock pulling back to $900 and moving below its bullish 50-day moving average. Costco's most recent earnings did help the stock to regain support at 50-day trendline to continue its rally.
Today's jump in the stock was a result of the announcement that Costco has reached a tentative agreement with its union.
The large single day move also puts Costco shares above their top Bollinger Band.
A stocks Bollinger Band are a measure of its volatility. The recent consolidation of the stock has caused a tightening of those bans, suggesting that we could see a volatility rally to the upside in Costco.
Today's break above that volatility band and the $1000 price level is likely to be a technical catalyst for the next 10% to 15% rally.
From a fundamental perspective, investors continue to be attracted to Costco shares, namely for the fact that the company is known as an “inflation fighter” stock. The stock returned more than 100% since 2023 as revenue and earnings per share enjoyed robust growth.
Costco shares maintain a long-term bullish outlook with a price target of $1,200.