Here’s my take on LULU, UAA and ULTA. (Two are on our Growth Stock List). (June 19, 2019)
LULU UAA ULTA
I am going to continue looking at our three stocks this week, Lululemon ( NASDAQ: LULU ), Under Armour ( NYSE: UAA ), and Ulta Beauty ( NASDAQ: ULTA ); they all kind of look beautiful in their own way.
Lululemon ( NASDAQ: LULU ) broke out yesterday, that was after the day before. So we are on this thing where I mentioned this the other day, the stock gapped up on earnings and then promptly fell down. Here’s the thing, once the stock does this, once the stock falls like this, this isn’t the critical day, this is the critical day, the following day.
The stock fell and you wonder is it going to test or hit the 50-day moving average? It didn’t even do that. So just this day alone was enough of an indication that you should be bullish on this stock and actually start looking for an entry. Not the perfect entry but when a stock gaps up, sells off on huge volume and then does not continue to sell, that’s a real bullish indication. Then on Monday we got a higher close, this was an all-time high. And then on Tuesday higher still. And then finally today we are just kind of peaking out here.
This is what I would suggest doing: I mentioned the other day; you can take a small starter position. Part of that would be because you are looking at the weekly chart and you are saying, “Okay, this is actually up quite a bit.” Jim Cramer mentioned it on Mad Money the other day. He featured my work there, which he does from time to time.
I am looking at this stock as pretty much able to go to 220.00 without too much trouble, maybe even higher, so this would be more of a long-term play. But a long-term trade starts with a short-term trade and so the whole idea is to get the right entry. You take a little bit of stock now, just barely, just to get involved. Part of that plan would be, if the stock pulls back to 180.00, that’s when I am going to make my real buy. That’s how I would trade Lululemon ( NASDAQ: LULU ).
Under Armour ( NYSE: UAA ); the idea here is, fundamentally the stock is good. Technically it’s a little bit better picture, probably a better picture than Lululemon ( NASDAQ: LULU ) because it has more upside from where it is right now. Here, the stock isn’t breaking out. The stock actually broke out here and it was a sloppy one. So I think you have plenty of time to get in on this one. It is just kind of trickling up; I mentioned that the volume is down just a little bit.
You could rush out and buy this stock right now, but personally, I think if you wait, if you are patient you will probably get a better opportunity in the next week or so to buy it closer to 25.00. This would be my question to you, and think about it carefully; would you rather buy the stock right not at $27.00 just to be in, okay I’m in the stock, and then deal with it pulling back? Or would you rather not be in the stock and watch it pull back and wait for a better entry? For me, it’s number 2, waiting for the best entry. So that is how I would trade that.
Then finally, Ulta ( NASDAQ: ULTA ). Ulta ( NASDAQ: ULTA ) is another stock like Lululemon ( NASDAQ: LULU ) that is on our Growth Stock List. I was looking for this to trade down more, hoping that it would fall back clear to the 50-day moving average but it’s not really doing that.
We actually just put on a bullish option position on this; a bull call diagonal spread on Ulta Beauty ( NASDAQ: ULTA ) to take advantage of this. I think it is ultimately (pardon the pun) going to work out okay. The stock is working really nicely, a nice little base pattern here. A higher high; what we are looking for is some kind of stabilization around this level and then look for the stock to do this, boom, so this would be the new support line. So you get that, a move up here, a pullback, and then that’s what we are looking for.
That’s how I am trading these three today.
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