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Should You Buy Bed Bath & Beyond After Its Earnings Dip?

Bed Bath & Beyond was participating in a pre-earnings breakout but fails to deliver strong results. Let's look at the chart now.

Shares of Bed Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report were getting hammered on Thursday, currently down about 10%.

The move came as the S&P 500 climbed to new all-time highs, but on a day when the retailer reported disappointing quarterly results.

The company missed on earnings and revenue estimates and has clearly underwhelmed Wall Street despite its overall fundamental improvement.

On the plus side, the company boosted the top end of its repurchase program to $825 million. Keep in mind that at current levels that’s more than one-third of the company’s market cap.

Further, support continues to hold for this name and shares were well off Thursday's low. Let’s look at the charts.

Trading Bed Bath & Beyond

Daily chart of Bed Bath & Beyond stock.

Daily chart of Bed Bath & Beyond stock.

At one point, Bed Bath & Beyond was down more than 15.5% on Thursday. While the stock had cut those losses to less than 7%, it appears to be running out of steam.

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The stock now is in sort of a messy area.

On the one hand, support is holding at the 2020 pre-coronavirus high from February and the gap-up low from October. Both levels are just under $18.

The 100-day and 200-week moving averages are also in play as support.

At the same time, the stock is back below downtrend resistance — which it broke out over earlier this week — as well as the 10-day, 50-day and 10-week moving averages.

We need some clarity before becoming too aggressive with Bed Bath & Beyond stock.

A break of the post-earnings low at $17.75 and this stock may go on to fill the previous post-earnings gap from October between $15 and $15.40. Below that may also put the 200-day moving average on the table.

On the upside, I would like to see this name clear its key moving averages, but also clear $20. Above the latter would help put some of this mess behind the stock and let bulls regain control.

If that happens, the next level to watch is this week’s high, at $21.57. Above could put the November high in play, but let’s take it one step at a time. First, we need to see $20-plus before any of that is possible.