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Bed Bath and Beyond (BBBY) - a Good Buy after a Correction Year?

Bed Bath and Beyond (BBBY) has been bearish throughout 2015. We have seen price slide more than 15% in the past 3 months. Here are some notes from, as we await earnings for Q2 this week:

Bed Bath & Beyond Inc. (NASDAQ: BBBY) is set to report its fiscal second-quarter results on Thursday. The analysts’ consensus estimates call for EPS of $1.21 and $3.03 billion in revenue. The company is a top retailing company and is the fourth-ranked stock on the Merrill Lynch list of buyback leaders. The company’s outstanding shares dropped 4.3% year over year. The company operates stores under the names of Bed Bath & Beyond, Christmas Tree Shops, andThat!, Harmon, buybuy BABY, World Market and Cost Plus. Shares were changing hands at $60.28 near Friday’s close. The consensus price target is $74.06, and the stock has a 52-week trading range of $58.81 to $79.64.

Read more: Top 5 Earnings for the Week Ahead - Lennar Corp (NYSE:LEN) - 24/7 Wall St.
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Now, when we look at the technical picture, we are indeed seeing a sharp decline. There's a saying "don't catch a falling knife". I would heed this warning, but also look at the fact that this falling knife is about to take a stab into a multi-year support area between 54 and 55. 

BBBY Weekly Chart 9/21

(click to enlarge)

If price gets into the 54.00-56 area, and shows some kind of bullish divergence with the weekly chart, we should consider a buy and hold strategy in the medium-term. (Hold for a year or so). Now, I am going to get ahead of myself just a bit here. Since the prevailing trend entering 2012, before the sideways action, was bullish, There might actually be upside beyond the highs around 80.00. 

Taking a step back, we should also consider the possibility that the upside is no longer viable, not even to 80. If the market is going to form a multi-year price top, we need to limit any bullish outlook to the 70-72 area, or even lower, near the central pivot around 68. 

Another thing to consider is that the market CAN clear 54.00 before resuming the long-term uptrend. The monthly chart shows a bullish market, at least since 2009. I would at first anchor in small positions with wide stops. Then, if the market starts piling up evidence of a bullish reversal around 55, then we can add more positions, and start to treat this area as support. For now, don't over depend on 54-55 for support. 

BBBY Monthly Chart 9/21
(click to enlarge)