Bed Bath & Beyond (BBBY) is among the top gainers on the Nasdaq today. The home furnishings retailer is surging almost 4% on very heavy trade following positive comments from Bernstein. Bullish investors have been active since the bell, pushing shares past a very heavy layer of resistance near the 2011 highs. The high-volume move past the $63.50 area has moved BBBY to an all-time high amid what is shaping up as a healthy upside breakout.
The stock quickly reversed higher after reaching its 200 day moving average on Oct. 4. By the end of the month the stock had rallied nearly 20% and was testing the $63 area for the first time. This level was tested again in early November without much of a dip. Late that month BBBY faded along with the overall market and followed up with a rip higher after Thanksgiving. The $63 resistance zone proved its weight again in December, containing back-to-back weekly highs. Shares stalled just below this area until a disappointing third quarter led to an ugly breakdown. BBBY closed on the Dec. 22 with a 6.25% loss on its heaviest downside trade since summer 2010.
Despite the damage, the stock held above its 200-day moving average, leaving behind a spike low. BBBY battled back into early January, and after a short struggle near the Dec. 22 breakdown gap, the stock was bumping up against $63. This level held again, capping the January/February highs. A fade from last month's early peak became a five-day losing streak on accelerating trade. BBBY's 200-day held the damage again without a retest of December's spike low. The stock has been in a steady climb for the past three weeks on its way back up to $63.
Bed Bath & Beyond (BBBY)
Source: TradeStation
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The breakout move today has taken out the upper trendline of a 20-week consolidation. BBBY has now put considerable distance on what was a wall of supply between $63 and $63.85. This heavy resistance zone marked the highs of the last five months and included nine weekly tops. With this layer now cleared it will supply major support as a new bull leg for BBBY develops. Considering shares are now up nearly 15% from last month's lows I am hesitant to chase it up here -- I will remain on the sidelines until a pullback plays out. A retest of the old highs would offer a very-low-risk buying opportunity.
No positions.