Athletic clothing retailer Lululemon (LULU) is a stock that remains on many traders’ radar. As the company continues to reinvent the yoga pant and is trying to learn from its mistakes — namely, see-through pants — Lululemon stock trades in a choppy fashion, though it seems to respect technical levels.
Long gone are the days of LULU’s tight, uptrending trading channels from 2009 and 2010. Now, a more proactive approach is required to squeeze profits out of Lululemon.
The multiyear chart of Lululemon stock clearly displays the LULU’s widening trading ranges, which reflect a stock littered with not-so-small post-earnings up- and down-gaps. LULU has support at its 2011 uptrend, which currently comes in around the $64 level, and a break of which would qualify Lululemon stock as making a lower low — a bearish indication.
On the daily chart, LULU is displaying some nice, tight technical patterns that those inclined to swing-trade the stock can use as defined areas of support/resistance:
Note that on Sept. 18 — the day of the FOMC September decision announcement — Lululemon stock rallied sharply, breaking a resistance line dating back to the June highs. Since that date, LULU has been consolidating its mid-September rally in the shape of a bull flag (black parallells), right beneath a lateral resistance line from the August and September highs near $74.80.
We also can see that LULU shares’ 50-, 100-, and 200-day simple moving averages all are flat-lining at the current juncture, as the stock is basing above them, using them as support.
All in all, Lululemon stock looks to be coiling up under a resistance area, ready to push past the $74.80 resistance point.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.