Here’s how we traded Lululemon ($LULU) for an easy 25%. (June 11, 2020)
LULU
I want to just go through, real quick, a Lululemon ( NASDAQ: LULU ) trade that we made. This was a swing trade; it wasn’t and investment it was just a swing trade that ultimately worked out pretty well, so I just want to kind of go through the legs.
We first decided to get into this stock back here. For various reasons, the most significant of which was, it had broken out above the 200 and the 50-day moving average. It settled in and then found some support. So we are buying there and we’ve got a stop right down here, so that was the risk. And the stock runs up, goes through a little natural pullback here; a higher low, we stick with it and then the stock runs up here.
So it breaks through this high here, it breaks out there. It only goes up a little bit and it starts to roll over. And so I am thinking, we’ve got a decent trade going here, from here to here, so let’s sell. So I took half of the position off and let the other half run. Raised them a stop, and so what happens? The stock does continue to run and breaks out to a new high. It kept going, runs up here, and then I decide, okay, I am going to take another half off the table. So we took half off here for a pretty good gain. And then we took half off more here for a much better gain, which works really well.
The idea was that I was going to hold this through earnings after the close even though the market was kind of weak. I had a stop on the last stuff; I think we had bought the shares at 215.00 we bought them at 215.00. The stock is over 300.00 and I am going, even though we can hold this with plenty of room I need to lock in a profit on the rest of this stuff just because I really don’t feel like risking a big move here. We sold the last part at 307.00. So what we had started at 215.00 or so, we were completely out of at 307.00. And then, of course, what happens after the close? The company reports earnings and they are kind of crappy and so this is what the stock does.
The reason I am showing you this is because this is a trade, and this was on our Growth Stock List, members traded this right along with me every step of the way, this was a pretty low-risk trade. It worked out really well; some of them don’t work out as well.
What I liked about this is, we got profitable right away. It held through this little natural pullback here and then took some profits for an okay, like 13 or 14 percent I think. And then we held it, took some at like 30 percent and then the last bit of it was probably at about 40 percent. Because we took half off at first that kind of weighed down the overall return on the trade. But of course, the last one when you are taking 40 plus percent, that kind of makes it feel pretty good.
So overall on this trade we took out 24-25 percent basically in a 50-day trade. This is the type of trade that I like to do. It is definitely less stressful for me than banging stocks all day long, looking for a 1 or 2 or 3 percent move. You can do this kind of stuff too; you just need the proper setup. Anyway, that’s what I did with Lululemon ( NASDAQ: LULU ).
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