Yesterday’s action perfectly illustrated why I spend my days hunting for stocks that refuse to follow the crowd.
While semiconductors got obliterated – Texas Instruments down 6%, the entire SMH sector bleeding red – I was watching something fascinating happen with Costco.
As the SPY kept grinding lower and Netflix got annihilated on earnings, COST was quietly climbing higher.
The Contrarian’s Edge
During selloffs like yesterday, most traders get tunnel vision on the carnage. They miss what’s actually important: the stocks that completely ignore the broader weakness. When you see a name pushing against the tide while everything else bleeds, that’s your signal.
Costco delivered exactly that setup yesterday.
The Technical Picture That Caught My Eye
COST broke above a key resistance level around $945 with conviction – not the hesitant, volume-less breakouts you see in weak markets. This was different. Real buying pressure while the indexes were getting hammered.
The technical levels here are clean:
- Immediate resistance at the 61.8% retracement: $948
- Primary target: $950-960 range
- That’s roughly $3-4 of upside room from current levels
But here’s what makes this a proper swing trade rather than just a day trade scalp: The fundamental backdrop supports sustained strength.
Why COST Works While Tech Craters
Look what’s actually happening while everyone’s freaking out about tech earnings. Investors are fleeing growth and momentum names, seeking refuge in companies with:
- Defensive business models
- Consistent cash flow
- Recession-resistant customer bases
Costco checks every box. While everyone’s panicking about AI valuations and semiconductor earnings misses, COST represents everything nervous money wants right now: stability, predictable revenue, and a customer base that shops there regardless of market conditions.
The Swing Trade Setup
This isn’t about catching a falling knife or fighting the trend. It’s about recognizing when a quality name breaks out against market weakness – that’s often the start of a sustained move higher.
My approach here is systematic:
- Entry: Current levels around $945
- Initial target: $950
- Secondary target: $955-960 range
- Stop: Break back below $940
The beauty of this setup is the risk/reward profile. We’re not trying to catch a 50% moonshot.
We’re looking for a solid 5-6% swing move in a quality name while the rest of the market sorts itself out.
However, if you trade options like I do, even a modest 5-6% move can lead to amplified profits.
Position Sizing and Management
For swing trades like this, I prefer taking profits in stages. Hit that first level and then take half off the table.
Let the remainder run toward $955-960 with a trailing stop.
The key principle: When you find a stock doing its own thing against market weakness, respect that strength. Don’t overthink it. The market is telling you something important about where smart money is positioning.
The Bigger Picture
Yesterday’s action in COST wasn’t random. It’s part of a broader rotation from momentum names into defensive quality. While everyone’s focused on the semiconductor carnage and Tesla’s earnings drama, names like Costco are quietly setting up for sustained outperformance.
These are the setups I’m hunting for – stocks that shrug off market weakness while everyone else is panicking about earnings misses.
Your Action Plan
While everyone’s glued to the semiconductor bloodbath and Tesla earnings drama, stocks like COST are quietly doing exactly what you want to see during market weakness – moving higher with conviction.
When you spot that kind of relative strength while the indexes are selling off, that’s your cue.
Don’t overcomplicate it. The market is showing you where the real money is positioning.
COST breaking higher while the SPY sold off wasn’t noise – it was signal. And that’s how you find the swings that actually work.
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