COST has been in a steady uptrend since early/mid 2007. When the stock has pulled back to its 200 sma during that period, it has been bought every time. That's very bullish action.
Right now I'm very cautious about taking long positions in the market. I think the market is destined to retest the lows and before then, it seems like a fool's game to go long for more than a quick trade. But since COST is more of a defensive position and the 200 sma looks like pretty rock solid support, I'm recommending looking a long position in COST at the 200 sma.
Before taking any position, look for some strong action off or around that level. You don't want to buy if it just flies through!
If it does firm up and hold, I'd take a position that is less than normal size given the volatile nature of the market and questionable upside at this point. Stop out about 1 percent below the 200 sma.
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