Earnings Play: Lululemon Athletica

Will Lulu consolidate and bounce or continue to fall?

Stocks (2)

On Tuesday, after market, Lululemon Athletica (LULU) is expected to release second quarter EPS of $0.55 compared to $0.96 last year on sales of approximately $844.1 million vs. $883.4 million a year earlier. The company designs athletic accessories and apparel, and its expected move based on front-month options is 11.0%. The last time the company reported earnings it fell 3.8%.

Looking at a daily chart, Lululemon's stock price has been rising in an uptrend since mid-March. On Wednesday, September 2nd, Lulu reached an all-time high of 399.90, where price action formed a doji candle before pulling back. The RSI shows bearish momentum and is currently sitting below its neutrality area at roughly 45. On Friday morning, price broke below its 20-day simple moving average (SMA) with a large price drop, a possible warning sign. Price will likely fall further and find support at the 325.00, as dip buyers could be looking for a late entry on the uptrend. Price will probably consolidate and chop around between 374.00 and 325.00. If price breaks below the 325.00 support level, price will most likely decline to the next support level at 284.00. If price can manage to hold above 325.00, it could potentially break out to the upside of 374.00 and advance to retest the record high just below 400.00. However, given the two consecutive large down days on the S&P 500 and the sell off in the tech sector, the bullish sentiment could be shifting.     



Source: GAIN Capital, TradingView

More from Earnings

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.