Members-only bulk big box retailer Costco (COST) - Get Reportreported on Wednesday evening that their July net sales rose by 8.8% from the year-ago period. The stock is poised for a modest bounce at the open this morning on these strong same store sales numbers. Here's how to trade it based upon its weekly chart and key technical levels. There was a pre-market trade of $162.49.

Costco was riding high until June 16, when the stock was blind-sided by Amazon's (AMZN) - Get Reportdeal to buy Whole Foods Market (WFM) . Particularly hurting was a downgrade to "neutral" from "buy" by Goldman Sachs (GS) - Get Report. The stock plunged by 17% from its June 15 close of $181.33 on June 15 to as low as $150.00 on July 21.

Costco closed Wednesday at $161.28, which is 16.9% above its post-election low of $137.96 set on Nov. 9. The stock is also 11.7% below its post-election and all-time intraday high of $182.71 set on June 6. The final push to the high was fueled by a positive reaction to earnings released on May 25. Shares rose 0.4% to $161.91 on Thursday morning.

As August began, Guggenheim indicated that Costco would report strong July same-store sales. Strength in anticipation of this bullish research call upgraded the weekly chart profile to neutral from negative but oversold.

The Weekly Chart for Costco

Courtesy of MetaStock Xenith

The weekly chart for Costco will be upgraded to neutral if Friday's close is above its five-week modified moving average (in red) at $159.14. The 200-week simple moving average (in green) is the "reversion to the mean" at $137.53, last tested during the week of Sept. 3, 2010, when the average was $53.85. The 12x3x3 weekly slow stochastic reading is projected to end the week at 14.24, still below the oversold threshold of 20.00.

Investment Strategy: The neutral zone is between the 200-day simple moving average of $159.33 and the 50-day simple moving average of $164.16. Buy weakness to the 200-week simple moving average of $137.53. Sell strength to my annual, semiannual and quarterly levels of $172.76, $173.19 and $176.43, respectively.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.