The Strange Chart Pattern That Keeps Showing Up

It’s become known as a “meme” stock but you can call it whatever you want as long as you recognize the type of madness behind the trading of Bed, Bath and Beyond (NASDAQNDAQ
: BBBY). The markets tend to develop this kind of wacked-out, crazed buying and selling in a number of securities at a time of bullish extremes.

What’s strange, though, is the chart pattern that repeats itself over the months, weeks and days of trading in the stock. It’s not a price up-and-down that you see, typically, in most stocks that are publicly traded. Whatever the explanation may be, it’s worth looking at just for the sheer oddness of it.

Here’s the Bed, Bath and Beyond (NASD: BBBY) monthly price chart:

Circled are the price candlesticks demonstrating something you don’t see too often among well-known, name-brand equities: sudden spectacular gains followed quickly by sudden spectacular profit taking (aka: selling). The pattern emerges in mid to late 2020 and then continues, with regularity, for the next 3 years and beyond.

Compare this to the chart of an average, everyday name-brand retail stock:

I can only identify 2 possible candidates for the “stick” quality seen in Bed, Bath and Beyond monthly chart — neither of which reach the same kind of up-and-down magnitude. Ebay’s mid-2020 peak and the late 2021 top are similar but lack the drama. Just as an example of the difference.

The Bed, Bath and Beyond weekly chart is here:

This closer view of the chart action makes it clear what kind of pattern shows up, time after time. Beginning with the early 2021 action: the explosion of buyers took the price up to $52.50 and then a massive tide of selling took it back down to $37.50. That’s within one week of trading.

This type of action might be written off as a unique, one-off kind of moment, but it shows up again, with slightly less ferocity, at the beginning of June where the price hits a peak of $44 and then sellers appear in great enough numbers to take it back down to just below $32.50. A less dramatic repeat comes in again later that month.

It’s unnecessary to study the chart too closely before noticing that this pattern appears again on at least 3 occasions in 2022. It almost sticks out.

The daily price chart for Bed, Bath and Beyond looks like this:

The August trading took the stock from $6 to $30 and then back to $10, an extraordinary trip reminiscent of penny stock trading back in the 1980’s. The most recent action shows that Bed, Bath and Beyond in February, so far, traded up to just above $7 and now goes for $2.35, a move from peak to trough of -66%.

It’s easy to write this off as “meme stock action” but that this type of trading goes back for years is peculiar. Not too many were even using the word “meme” in 2020.

For a different perspective, here’s the point-and-figure chart for Bed, Bath and Beyond:

From $53 in 2021 to $2.35 last week is dramatic enough but it’s the wild ups and downs in between that attract real attention.

Not investment advice. For educational purposes only.