Here’s your swing trade on Lululemon ($LULU) (September 23, 2019)
LULU
I want to look at Lululemon ( NASDAQ: LULU ) today. If you really kind of look at this stock it’s been pretty choppy, kind of zigzagging all over the place. But if you just break it down to the moving averages, you can see the 200-day here, a nice steady uptrend. The 50-day is kind of moving parallel to that, quite a ways above it actually. Again, just kind of drifting higher, so the overall trend is high.
The toughest thing about Lululemon ( NASDAQ: LULU ), unless you are just a buy and hold person, which, that’s fine, that’s one way to do it, but the toughest thing about it is to find low-risk entries. When I say low-risk I mean, areas where within this uptrending stock you can buy the stock close to a level at which, if the stock hits it, you would say, “Oh crap, I’m wrong about this.” a stock is pretty volatile, those times are pretty far and few between.
I think we kind of have one here based on what is happening today. The stock rebounded off of 190.00, that was after a close on Friday just slightly below that but we’ll call it 190.00, and prior to Friday, we had resistance right back there. What happened was, the stock gapped up, ran up above this last little area of support and then effectively pulled back. And as of today, it rebounded off of that on average volume, not super heavy volume but average volume, and that’s okay.
So the entry on this trade is this, I bought some shares earlier today, not a big position, it’s just not the kind of market, at least from my trading that’s rewarding big positions. Maybe I am just a crappy trader and everybody else here is making hand over fist, I don’t know. I am trading very lightly in a very dicey market. You are buying this stock here and then as long as the stock stays above the 50-day moving average you can hang on to a volatile stock like this; because the 50-day moving average should define the uptrend.
Now, you can say, “Well, I don’t know how you can set your stop there because look what happened back here. It went below the 50 and then it went up here. It was below for about a month and then finally it broke out.” And to that I would say, “Sure, yes it did.” It might do that again and if it does that again do you know what I will do? I will probably wind up selling there and then I will watch the stock. And then if it starts doing the same thing again then I will buy it again, that’s just trading.”
You can’t predict, you can only react after you plan. My plan is, that the stock should find some support here. It should not hit this stop right down here around 185.00 or so and if the stock runs back up to 205.00, that’s when I am going to look to take profits; because that is right where this uptrending resistance line is. That’s really the trade. This is an, oops I’m wrong, and this is an, okay it’s time to take profits.
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