It's been a tough year for electronics retailer Best Buy (BBY - Get Report). Shares of the $4 billion firm have slid 50% in the last year, pulled lower by thinning margins and a tough environment for retailers in general. But the selling may not yet be over -- at least in the short-term -- if the price pattern in shares holds up.
Right now, Best Buy is forming a descending triangle, a setup that's formed by horizontal support below shares and downtrending resistance to the upside. Essentially, as shares of BBY bounce in between those two technical levels, the stock is getting squeezed closer and closer to a breakdown below support. When that breakdown happens, investors have a sell signal for the stock. Best Buy's support level currently sits right at $11.
The descending triangle pattern in BBY is a shorter-term pattern -- it's only been forming for the last month and change. And while that means that the trading implications of the breakdown are shorter too, the combination of a descending triangle breakdown and a fall to new lows for BBY make the stock's downside potential much bigger if a slide below $11 does happen. Keep a close eye on this one.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts