BBBY — May Have A Long Term Run to the Low 80s

I’m working off a Fibonacci price cluster buy setup that was identified on a weekly chart at the 5416-54.55 area. If this setup is going to play out, we are only at the beginning of the move as the target on the weekly chart is 81.69. An important hurdle that comes in below that comes in at 67.17-67.62. After holding weekly support, we have seen an initial rally on the daily chart followed by a pullback. We have seen buy triggers AFTER this pullback to the key weekly low. Bottom line, I like the buy side of BBBY as long as price continues to hold above the recent daily low at 56.37.

BBBY is a non-dividend paying stock that has LEAPS listed on it. Looking out to January 2014 with a bullish outlook on BBBY there are several in the money Jan 2014 LEAPS Calls that do not have too much time value. For example BBBY went out at 58.83 today and the BBBY Jan 2014 45 Strike LEAPS Call was offered at 15.50. This LEAPS Call has 13.83 of intrinsic value and 1.67 of time value. If BBBY is over 60.50 at January expiration any amount above that price would be a profit on the trade. Also, if the target price of 81.69 is reached before January 2014 the LEAPS can always be sold.