HAL9000
Long

Bad news already in the price: Buy on broker downgrade.

NASDAQ:LULU   LULULEMON ATHLETICA INC
107 5 7
3 months ago
Current consolidation range 54-59.
We are at the bottom of this range.
This bottom also corresponds to the long term support line, visible on weekly chart below.
Stock downgraded this morning by Credit Suisse but fails to break the support.
Believe most bad news is in the price.
Short interest on the stock is significant: 23% of float - Makes short squeeze probable on any marginally good news.
Consensus is a BUY with target price at 69.
Looking at a break above the 59 resistance.
Target 66
Stop loss 54
RR 5x

snapshot
2 months ago
Comment: Every weakness towards 55 has been met with a strong rebound, such as yesterday. This validates our stop-loss at 54 and the current trading channel ($54-$59). Still awaiting a breakout to the upside on the basis of improving technical picture and a belief that “most bad news is in the price”. Short interest, as a % of float, has also been decreasing, another positive sign.
2 months ago
Comment: Day of reckoning tomorrow as the company release quarterly earnings on Dec 7 after the close, contrary to what is indicated on the graph.
2 months ago
Comment: Those who are not in this trade might want to take advantage of the volatility around earnings:

1. Dec 16 maturity --> Buy call $59 / Sell put $54 = -$0.51/share (indicative) = 0.89% cost

2. Jan 20 maturity --> Buy call $59 / Sell put $54 = -$0.56/share (indicative) = 0.98% cost
2 months ago
Trade active: Expected break to the upside has taken place as expected on the earnings, and under the scenario where all the bad news is in the price. The current volume after the first half hour of trading is already twice the average daily volume, pointing to significant institutional interest. Previous resistance at 66 has become support. Keep long with a stop-loss at 66. Those who put on the options strategy should exercise the calls and keep the shares.
2 months ago
Trade closed: target reached: - Stopping this thread/idea and starting a new one;
- Assuming a long position at 60
- Assuming all put premia cashed in
- Assuming calls exercised
MunTrader
3 months ago
I'm in agreement with your idea, and was thinking along the same lines. I will add one caveat. Both the 100 SMA and the 200 SMA are converging at $66. I would buy here, and watch at $66. It may stall out there. Still a good run from $54 to $66.
+1 Reply
HAL9000 PRO MunTrader
3 months ago
@MunTrader, Agreed. SMA200 slightly >66 provides resistance, confirmed by the convergence you talk about - Hence my $66 target. The tricky part will be to clear the 59-60 area which shows multiple resistances on 3 main time frames (D, W, M). I believe the earnings on Dec 14 might provide the needed catalyst for an upswing. Currently still long at $55.50.
Reply
HAL9000 PRO
2 months ago
At 58.98 on the intraday high of yesterday, LULU touched, failed to break and therefore just re-confirmed the significant 59 resistance.
Reply
MunTrader
2 months ago
Congrats...Great jump to $72. I sold all at $71 for a 28% Gain. I think I will watch from the sidelines and see what happens at the earnings.

I wish all my trades were like this!
Reply
HAL9000 PRO MunTrader
2 months ago
@MunTrader, well done ! Thanks for following !
Reply
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