The Daily Breakdown looks at the recent rally, then fizzle on Wall Street. Costco stock tries to snap out of its funk with a breakout.
Wednesday’s TLDR
Markets continue to fluctuate
Jobs report is in focus
Costco stock tries to break out
What’s happening?
After a strong rally on Monday, everything seemed to go the opposite way on Tuesday.
Nvidia hit new all-time highs yesterday, but then rolled over and closed down more than 6%. Bitcoin cleared $100,000 on Monday, then rolled back below it on Tuesday. The S&P 500 and Nasdaq weren’t able to hold up, either.
I think there are two issues right now: The rising US dollar and rising Treasury yields. On Friday, I’m going to dig into that thought a bit more for you. For now though, let’s focus on the rest of this week.
Yesterday, we had better-than-expected jobs data, with almost 8.1 million job openings reported vs. expectations for 7.73 million job openings. This is good news — even if “good news” lowers the odds of rate cuts — and on Friday, we’ll hope for even more good news when we get the monthly jobs report.
Remember, that report will tell us how many jobs were added or lost last month, as well as the unemployment rate. Right now, economists estimate that roughly 155,000 jobs were added last month and that the unemployment rate will ring in at 4.2% (in-line with last month).
And remember: US stock markets are closed tomorrow for a National Day of Mourning following the passing of President Jimmy Carter.
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The setup — Costco
There wasn’t a lot of good action in yesterday’s session, but Costco caught my eye.
Shares of Costco have fallen in four straight weeks, and despite a lofty valuation, it’s considered a best-in-breed retailer. Amid that losing streak, the stock fell about 10% from its highs.
Now though, shares are trying to snap out of their funk and find some upside.
Technically, Costco may set up well but the reality is, if the markets continue lower, that may very well pull COST down with it. Investors taking active positions in the market should keep this mind — not just for Costco, but all individual stocks.
For Costco specifically, bulls will want to see the stock hold up above the recent low near $900. If the stock can’t do so, shares can continue lower — potentially down to the 200-day moving average and the big prior support zone we highlighted in November.
However, if the recent breakout remains intact, then Costco could have more upside — especially if we get a bounce in the overall markets.
What Wall Street is watching
AAPL – Apple stock climbed to all-time highs on December 26th, but has struggled since, falling almost 7%. If shares continue a bit lower though, they may find some support near the 50-day moving average and a prior breakout level.
PLTR – Palantir was the best-performing stock in the S&P 500 last year, up 340%. Now though, it’s been struggling to start off the new year. Shares fell almost 8% yesterday and are down more than 12% so far this week. When will it find its footing? Check out the chart here.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.
