Buy Bed Bath & Beyond Right Now

Bed Bath & Beyond has retested a key technical low in time and price and looks poised for significant upside.
By Robert Moreno ,

Shares of Bed Bath & Beyond (BBBY) - Get Report are down over 20% year to date, but the stock has retested a key technical low in time and price and looks poised for significant upside.

Last month, long-term support in the $58 area was tested and held. This level has provided a base for three previous lows over the last four years that have followed 67-week cycles, and the stock is at another cycle low point in time. The relative strength index and the money flow index, a volume-weighted relative strength measure, have both moved out of oversold conditions on their weekly time frames and are crossing above their 21-period signal averages.

These are coordinated indications of improving price and positive money flow momentum.

The daily chart shows the last down cycle, with the stock moving back below its 50-day moving average in April and trading under it for the last seven months. It consolidated in a sideways pattern in October, and this month it broke above horizontal resistance at the $60 level and moved back over the seven-month downtrend line and the 50-day moving average.

Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator, and they are both crossing above their center lines -- confirmation of positive price momentum on multiple time frames. The accumulation/distribution line moved above its signal average last month and is continuing to track higher, and Chaikin money flow, a 21-period average of the A/D line, is well into positive territory. These money flow readings suggest strong buying interest in the stock at this price level.

Bed Bath & Beyond appears to have made an intermediate- to long-term bottom in time and price and is a good risk/reward long candidate at its current level, using a position size that accommodates an initial stop under the October low.

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

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