Best Buy (BBY) is a major retailer of durable goods and electronic products, from refrigerators to handheld devices. The stock has a gain of 32.8% year to date, and is in bull market territory, 59.7% above its Jan. 15 low of $24.97.
While this is a great short-term performance, the retailer has had a volatile ride for more than 10 years. The stock set its all-time high of $57.98 in April 2006, well before the crash of 2008. The stock set its multiyear low of $10.91 in December 2012, well after the market indices bottomed in March 2009.
The daily and weekly charts tell the short-term and longer-term stories and how to trade shares of Best Buy now.
Best Buy is expected to report third-quarter earnings of 47 cents a share before the opening bell on Thursday. There's a tug-of-war between analysts of the stock, as Evercore recently downgraded the stock to sell, while Virtus Investment Partners disagrees.
Let's see what the charts say.
The daily chart features a "golden cross," set on July 29, where the 50-day simple moving average rose above the 200-day simple moving average, indicating that higher prices were likely ahead. This is shown in the daily chart below.
The weekly chart shows a red line through the price bars, marking the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average, the "reversion to the mean."
The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicate overbought and readings below 20.00 indicate oversold.
A negative weekly chart shows the stock below its key weekly moving average, with weekly momentum declining below 80.00 in a trend toward 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 Best Buy.
Courtesy of MetaStock Xenith
Best Buy closed Tuesday at $39.88, up 32.8% year to date. It is in bull market territory, 59.7% above its Jan. 15 close of $24.97.
The stock has been above a "golden cross" since July 29, when the 50-day simple moving average rose above the 200-day simple moving average, indicating that rising prices were ahead. The stock closed July 29 at $33.60. On Aug. 23, the stock offered a better-than-expected earnings outlook and the stock popped higher, and set its Aug. 24 high of $40.58.
The stock is approaching its Aug. 24 high going into Thursday's earnings report. Note the downside risks on a negative reaction to earnings. First is the price gap to the stock's Aug. 12 high of $35.46. Second is the price gap to the Aug. 22 high of $33.60. Third is the 200-day simple moving average of $33.74.