During Friday's Mad Money program, Jim Cramer was bullish on Best Buy Co. (BBY) , a company that continues to turn itself around. Prices lost a lot of ground late last year and its rebound since the end of December looks like it has run into overhead resistance.
Let's check out the charts and indicators in store.
In the daily bar chart of BBY, below, we see a mixed technical picture. Prices fell from near $85 in August to below $50 in December. On the way south prices held in the $70-$75 area for about five weeks or so. This was support or buying interest on the decline and it is likely to be resistance on the rally north.
Prices have rebounded but volume declined in January and February until a recent upside price gap when volume surged. The daily On-Balance-Volume (OBV) line has crept slightly higher the past two months but it has recouped the ground lost from October to December.
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in a buy mode but that signal could be reversed quickly. The 50-day moving average line is rising but BBY has so far failed to close above the declining 200-day line.
In the weekly bar chart of BBY, below, we can see a more positive picture without the price gap on the daily chart. Prices are testing the declining 40-week moving average line.
The weekly OBV line shows a decent rise the past two months and the MACD oscillator signaled that we should cover shorts.
In this Point and Figure chart of BBY, below, we can see the rally in price without the gap. BBY has reached and exceeded its price target of just $60.
Bottom-line strategy: BBY has indeed rallied significantly this year but it looks like it could pull back down to the $60 area again in the weeks ahead.
