Bears Grip Bed, Bath & Beyond Stock: Here's Where The Bulls Could Fight For Control

Bed, Bath & Beyond, Inc BBBY was sliding more than 5% in the premarket Thursday after gapping down 27.25% on Wednesday.

The big box retailer announced Wednesday a strategic business update to improve its balance sheet, increase revenues and drive growth, which received a bearish reaction.

The plan includes new $500 million financing, a 20% reduction in its workforce and the closure of about 150 of its lower-producing retail stores.

The massive plunge following Bed, Bath & Beyond’s announcement negated a short uptrend the stock had been trading in since Aug. 23 but a downtrend hasn’t yet been confirmed.

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The Bed, Bath & Beyond Chart: In order for Bed, Bath & Beyond to confirm a downtrend, the stock will either need to bounce up to form a lower high under the Aug. 30 high of $15.15. Bearish traders would like to see the stock fill, at least, the closest upper gap that exists between $9.97 and $11.52 on the next bounce.

There are also two other gaps above on Bed, Bath & Beyond's stock, which may make bearish traders nervous. Gaps on charts fill about 90% of the time, making it likely the stock will rise up to fill each of the empty trading ranges at some point in the future.

• Bullish traders want to see Bed, Bath & Beyond trade sideways for a period of time to allow for the stock to run out of sellers, and then for big bullish volume to come in and drive the stock back up toward the Aug. 30 high-of-day. After a period of consolidation, bullish traders will want to fight in order to push the stock back up above the eight-day and 21-day exponential moving averages.
• Although Bed, Bath & Beyond lost support at the 200-day simple moving average (SMA) on Aug. 19, the stock is still holding slightly above the 50-day SMA. If Bed, Bath & Beyond traders lower on Thursday, the stock is likely to find at least temporary support at the 50-day.
• Bed, Bath & Beyond has resistance above at $10.64 and $11.45 and support below at $8.29 and $6.36.

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Photo: rafapress via Shutterstock