Retailer Bed, Bath & Beyond (BBBY) - Get Report sells household goods, and you would think an improving housing market would have helped this stock. Well, not quite, at least until recently, which will be evident in the company's earnings due after the close Wednesday.
Analysts expect the retailer to earn $1 a share. Cleveland Research opines that same-store sales look uninspiring. Loop Capital goes even further, issuing a sell rating as the retailer loses ground to online sales from competitors.
Let's see what the charts say.
The daily chart shows Bed, Bath & Beyond has been under a "death cross" since June 17, 2015. Recent strength has the stock above its 200-day simple moving average and a positive reaction to earnings could end this "death cross" before the end of the year. A "death cross" occurs when the 50-day simple moving average falls below the 200-day simple moving average. It indicates lower stock prices lie ahead, which certainly has been the case for Bed, Bath & Beyond.
The weekly chart shows a ray of hope: Bed, Bath & Beyond has had a positive weekly chart since the week of the election.
The weekly chart shows a red line through the price bars, which is the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean."
The study in red along the bottom of the charts is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold.
A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00. A positive weekly chart shows the stock above its key weekly moving average with weekly momentum rising above 20.00 in a trend towards 80.00.
Here's the daily chart for Bed, Bath & Beyond.
Courtesy of MetaStock Xenith
Bed, Bath & Beyond trades around $46, down 4.2% year to date, and in correction territory 12.4% below its March 7 high of $52. 71. The stock has rebounded by 19.7% since setting its 2016 low of $38.60 set on Nov. 4.
The key feature of the daily chart is the "death cross" confirmed on June 17, 2015 when the stock closed at $70.07. With the 50-day simple moving average below the 200-day simple moving average the stock would likely trade lower and it did to a low of $38.60 set on Nov. 4.
As a sign of stability, the stock has been trading back and forth around its 200-day simple moving average since Nov. 14. The stock goes into earnings above its 50-day and 200-day simple moving averages of $43.53 and $44.93, respectively.
Here's the weekly chart for Bed, Bath & Beyond.
Courtesy of MetaStock Xenith
The weekly chart for Bed, Bath & Beyond is positive with the stock above its key weekly moving average of $45.22. The stock is well below its 200-week simple moving average at $62.06, and has been below this "reversion to the mean" since the week of July 24, 2015 when the average was $66.93. This implies that the stock has been behind the earnings woodshed for quite a while. The weekly momentum reading is projected to rise 77.11 this week up from 72.98 on Dec. 16.
Investors looking to buy Bed, Bath & Beyond should do so on weakness to $39.17, which is a key level on technical charts until the end of December. The $46.68 level is a pivot or magnet until the end of 2016. Investors looking to reduce holdings should consider selling strength to $48.50, which is a key level on technical charts until the end of this week. A higher risky level is $58.35.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.