Bed, Bath & Beyond (BBBY) is a specialty retailer in the home furnishing sector that has had a tough go for the last two years. Since its January 2015 peak just shy of $80, BBBY has lost approximately half of its value. Despite this, its technicals still look weak. BBBY was on a four-week losing streak by Jan. 13 that consolidated at a lower level after dropping sharply in the middle of December.
BBBY held an impressive post-election rally of nearly 20% in three days that continued into December where it set a seven-month high. But if failed to take out resistance around $49 and formed a bearish engulfing candle on Dec. 12. Losses accelerated after its Dec. 22 earnings call when it fell nearly 10%. This led BBBY to lose most of its post-election gains and potentially test or break its 2016 low. The $40 support level should serve as an area to short on an entry stop.
A bear flag has formed at these depressed levels, which suggests more weakness ahead. The $40 support level would be a good area to enter a short on an entry stop.
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