Bed Bath and Beyond Inc. (BBBY) was reviewed back in April and the charts were not encouraging. I wrote that, "BBBY shows no signs of bottoming. Further declines to the $14-$13 area seem likely in the weeks ahead. The $20-$25 area should now act as overhead resistance if BBBY tried to rally."
In the past three months BBBY fell to $16.52 - in May - not as bearish as my forecast. Prices have recently rallied into the $20-$22 area and failed at the declining 200-day moving average line.
Is there any improvement in the charts and indicators? Let's go shopping with some updated charts.
(For more on Bed Bath, see: Market Refuses To Go Lower: Cramer's 'Mad Money' Recap)
In this daily bar chart of BBBY, below, we can see some interesting new technical developments. Prices rallied above the bottoming 50-day moving average line in early June and tested the line in late June and yesterday.
A rally above $21 will put BBBY back above the 200-day moving average line and bring us closer to a potential golden cross of the 50-day and 200-day average lines.
Since April the On-Balance-Volume (OBV) line has risen suggesting that buyers of BBBY have become more aggressive.
The 12-day price momentum indicator in the lower panel shows a bullish divergence. Prices gapped lower in September and momentum made a low. Prices made a gap down and a lower low in April but momentum made a higher low. This difference is called a divergence and tells us that the pace of the decline has slowed and this can foreshadow a reversal at times.
In this weekly bar chart of BBBY, below, we can see a long decline for this stock. In June and July BBBY has been testing the declining 40-week moving average line.
The weekly OBV line is still pointed down but there is a bullish divergence of the 12-week momentum study versus the price action.
In this Point and Figure chart of BBBY, below, we can see both the long decline and a possible upside price target of $25.50.
Bottom line: After a long and painful decline it now looks like BBBY is establishing a base pattern. Risking to $17, patient investors and traders could probe the long side of BBBY at current levels and on strength. A rally to $26 will make the charts look a lot more positive.