Here’s my take on Lululemon (LULU) and Under Armour (UAA). (June 18, 2019)
LULU UAA
I want to look at Lululemon ( NASDAQ: LULU ) and Under Armour ( NYSE: UAA ) today. If you are a Mad Money fan, if you follow Jim Cramer at all, check out Mad Money tonight, this Tuesday’s show because he is going to be featuring Lululemon ( NASDAQ: LULU ) and Under Armour on his Off the Charts segment.
So what are we going to do with Lululemon ( NASDAQ: LULU )? You can see how 180.00 was the resistance level here. I put this stock on our Growth Stock List last week, just over the weekend, so right around 180.00 or so. It hadn’t been on there for very long but I think the stock has got a long way to go and I will tell you why; because from a trading standpoint, we’ll say this low is 160.00 and we will say the high here is 180.00 for this channel over the last couple of months. So a break out above 180.00 puts another $20.00 in play, which takes the stock up to 200.00.
Now, I am not saying it’s not going to pull back here first, it might or it might not. But I look at 200.00 as kind of a no-brainer. You just look at how the stock is trading and can you imagine it NOT getting up to this level? So I am looking at this as a buy right here right now. But then if we look at the weekly chart, frankly, I am seeing much higher prices because I can do the same type of measured move here of about $50.00, $55.00 or so and then you just stretch this up again and you get about 220.00, which is really where my price target is on this. So I think Lululemon ( NASDAQ: LULU ) can work on a number of different fronts.
Under Armour ( NYSE: UAA ), similar charts and some characteristics, the most notable is they are both going up. But if you look at Under Armour ( NYSE: UAA ) here, the weekly chart, what I am seeing is this type of volatility squeeze right here. The stock is just squirting out to the upside. It is still well below its all-time high, which by itself doesn’t mean anything other than just to tell me the stock has room to go before analysts are going to start freaking out.
I like the way the stock is trading here on the weekly chart. On the daily chart it is a little bit extended but I have some bones to pick with volume. We like to see institutional buying. Institutional buying is marked by tall green bars. Green meaning the stock is moving up. Tall meaning lots of volume. Well, if you look here, at the volume bars here, this is on the daily chart, you will see the big spikes here are with the buyers, with institutions. And so when we look at the volume here, on more of a micro scale, we get the big break out here and a sell-off, massive volume.
But then the thing as the stock declined, it wasn’t really on super heavy volume, it’s just about average volume, then we get another big break out to the upside on massive volume and then this little pull back on below-average volume. Then we get another break out on these three up days on big volume. So we are seeing this situation where you have got buyers coming into the stock on heavier than average volume and then when the stock is settling in it’s on lighter than average volume; no panic or anything.
The issue that I have with this, though, is really what’s happening here. Because if we look at the volume that accompanies that move you can see it’s actually below average. So what we’ve got here is a stock that has run up big on big volume and it is still moving up but the volume is kind of tepid so that’s a little bit of a concern to me. I am just mentioning that because I think it’s important if you see the stock pull back.
I think you can buy some of the stock here if you have a longer time horizon. But as a trader, frankly, I would rather stay with a daily chart and then look to see if the stock will ultimately pull back or at least pause a little bit and give you a chance to get in. The closer to 25.00 the better, but 25.00, even 26.00 or so would be a good time to enter this stock.
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