Best Buy (BBY) is up sharply today as the Telsey Advisory Group upgraded the shares to "Outperform" from "Market Perform". The research shop said the upgrade was based on its expectation that the retailer will benefit from the work-from-home trend and higher consumer adoption of e-commerce. BBY is on Jim Cramer's buy list for Thursday when they report their latest earnings.
Let's check out the charts and indicators. In this daily bar chart of BBY, below, we can see how prices have gapped higher and have continued to advance. Prices moved sideways since late April in a small consolidation pattern (think flag or pennant). Prices are above the rising 200-day moving average line and above the bottoming 50-day moving average line.
The daily On-Balance-Volume (OBV) line turned up from early April and is not far from making a new high. A firm and rising OBV line tells us that buyers of BBY have been more aggressive with heavier volumes being traded on days when BBY has closed higher.
The Moving Average Convergence Divergence (MACD) oscillator is in a bullish configuration above the zero line.
In this weekly bar chart of BBY, below, we can see that prices are above the bottoming 40-week moving average line. The weekly OBV line is pointed up and the MACD oscillator is crossing to the upside for a cover shorts buy signal.
In this Point and Figure chart of BBY, below, we can see that prices are right at the bottom end of an $88-$91 resistance zone. The chart is projecting a potential upside price target in the $112 area.
Bottom line strategy: BBY is up strongly today and we see only minimal chart resistance overhead. With earnings due out on Thursday we are likely to see further gains. New longs should risk a close below $81. The $112 area is our price target.
