Why Bed Bath & Beyond's Stock Could Slam Short Sellers Yet Again

Bed Bath & Beyond Inc BBBY was trading up more than 6% higher on Monday after Uber Technologies Inc UBER announced a partnership with the retail store to deliver emergency products to parents of kids and babies such as diapers and thermometers.

Bed Bath & Beyond has been a retail favorite over the past year and has been the target of two separate short squeezes with the first causing it to skyrocket more than 200% between Jan. 7 and Jan. 27 and the second squeeze causing the stock to soar 84% higher between May 26 and June 2.

Bed Bath & Beyond has the potential for another short squeeze due to its bizarre underlying statistics:

• Unbelievable Ownership Levels: More than the entire float is locked up by insiders and institutions with insiders owning 1.5% of the float and institutions a whopping 111.49%.
• High Short Interest: Of Bed Bath & Beyond’s 45.5 million share float, 26.81 million shares, meaning about 58.93%, are held short. The number has increased from 22.04 million in September.

See Also: How to Buy Bed Bath & Beyond Stock Right Now

The Bed Bath & Beyond Chart: Bed Bath & Beyond has been trading in a steep downtrend since June 30, losing about 66% of its value between that date and Oct. 27 when the stock hit a low of $13.38. The fall was exacerbated by a bearish reaction to Bed Bath & Beyond’s earnings print, which caused the stock to gap down about 18%.

After hitting the low, Bed Bath & Beyond bounced up about 12% higher and is trading in a confirmed uptrend on the four-hour chart. Next, the stock will need to put in a higher low on the daily chart to confirm the uptrend on the larger timeframe.

On Monday, Bed Bath & Beyond was working on printing a bullish Marubozu candlestick, which indicates higher prices may come on Tuesday. Bullish traders will want to see the stock close the trading session near the high-of-day to indicate the stock has run out of profit takers at the higher prices.

Bed Bath & Beyond recaptured the eight-day and 21-day exponential moving averages (EMAs), but the eight-day EMA is trending below the 21-day. Bullish traders will want the stock to remain above both moving averages to force the eight-day EMA to eventually cross above the 21-day. The stock is trading below the 50-day simple moving average (SMA), which indicates longer-term sentiment is currently bearish.

• Bulls want to see big bullish volume come in to push Bed Bath & Beyond up over a resistance level at $15.38, which will help it to regain support at the 50-day SMA. Above the level, the stock has resistance at $17.61 and $19.48.
• Bears want to see big bearish volume come in and drop Bed Bath & Beyond back below the EMAs and toward the key support level at $13.13. Below the area, there is support at $11.45 and $10.64.
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Photo by Damir Spanic on Unsplash