Downward Dog Pattern in LuluLemon (LULU)? More like the Warrior pose. (June 08, 2016)
LULU
I want to look at Lululemon ( NASDAQ:LULU ) today and here’s why: This chart goes back into 2014. One thing that’s been consistent about this, this has been resistance here, here, here, here, here, didn’t even make it up here, you can see. So this resistance at 68.00ish, we’ll even call it 70.00, has been pretty firm for a long time. Higher lows here, generally speaking. The bottom line is, this is a stock that’s been LOOKING or an opportunity to breakout and it finally got it. So I look at this weekly chart and this looks, actually, pretty good to me. I’m not going to walk you through the play by play going back years, but lets just say, after this kind of volatility squeeze here, then you got a sell-off, and then we’re back to this same level. I think this is a stock that you want to buy. In my view I think to say it’s going to test 80.00 is probably pretty conservative. Really, do you think with this kind of chart, gosh, do you really think it’s going to test 80.00? Yes, I do. And I don’t think it’s going to take it that long. So, point being on Lululemon ( NASDAQ:LULU ), I think you can buy it here on this breakout.
I would just suggest putting a stop, a fairly tight stop actually, because if your stop that I’ve placed here, if it gets hit, this could go down and test the 50-day moving average. It could even test 60.00. If you’re buying a breakout why do you want to be long if the stock falls all the way down to support? The whole reason why you’re buying this breakout is because you don’t think the stock is going to pullback. You think the stock is going to keep going. So that means that if it DOES pullback, like below 70.00, don’t put a stop right at 70.00, give it a little bit of room, but if the stock does pullback then that means that you were wrong to buy the stock. So why change your strategy from looking for a breakout to the ‘hope’ strategy, where you’re just hoping that the stock can help you make money? So keep a fairly tight stop on this, but look to buy Lululemon ( NASDAQ:LULU ). Because I think the stock works. And by the way, I’m not picking a price target at 80.00, you want me to do that I’ll say, “Hey, why not 100.00?” Why not 85.00?” I’m just saying the way the stock is running it could easily move to $80.00. And if we go from the bottom up to the top here, that’s $25.00 from bottom to top. So we can just extend this up $25.00 and that takes us to $95.00, so lets just put a price target of 90.00. Boom! There, I did it.
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