Bed Bath & Beyond Inc. (NASDAQ: BBBY)

Bed Bath & Beyond Inc., together with its subsidiaries, operates a chain of retail stores. It sells a range of domestics merchandise, including bed linens and related items, bath items, and kitchen textiles; and home furnishings, such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings, consumables, and various juvenile products.

Take a look at the 1-year chart of Bed Bath & Beyond (Nasdaq: BBBY) with the added notations:

1-year chart of Bed Bath & Beyond (NASDAQ: BBBY)

After jumping higher last month, BBBY has moved into a flag pattern. The pattern gets its name from the appearance of a “flagpole” created during the steep, mid-Octoberber rally, and then the formation of the small pennant formation since (green). This type of price action usually implies a break higher, but is certainly not a guarantee.

The Tale of the Tape: BBBY is consolidating within a flag pattern. A break above $15 area should lead to much higher prices, thus a long trade might be made. However, a break below the $13 area could lead to lower prices and a short opportunity.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT