Lululemon Stock Is Prepping for a High Lunge

by Serge Berger | October 2, 2013 9:40 am

Lululemon Stock Is Prepping for a High Lunge

Athletic clothing retailer Lululemon (LULU[1]) 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[2] — 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.

lulu multi year Lululemon Stock Is Prepping for a High Lunge
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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:

lulu daily Lululemon Stock Is Prepping for a High Lunge
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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[3]. Sign up for his free Weekly Market Outlook Video here[4]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. LULU: http://studio-5.financialcontent.com/investplace/quote?Symbol=LULU
  2. see-through pants: http://investorplace.com/2013/03/lululemon-recalls-unintentionally-see-through-pants/
  3. The Steady Trader: http://thesteadytrader.com/
  4. free Weekly Market Outlook Video here: http://www2.marketfy.com/l/15492/2013-05-06/4sf47

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