Lululemon Athletica Inc. - (LULU) - March 26, 2024 (Daily Stock Report)

by SIACharts.com

SIA Charts’ relative strength rankings help investors manage risk by identifying stocks and sectors which are underperforming relative to their peers and/or their benchmarks and should potentially be avoided. Staying away from stocks that are not attracting capital can help investors to avoid areas at higher risk of absolute declines and relative underperformance and to reduce negative event risk.

Lululemon athletica (LULU) reported earnings after the close last Thursday and then plunged 15.8% last Friday. Relative strength analysis had provided indications that the stock was vulnerable heading into the earnings report. LULU dropped out of the green zone into the yellow zone of the SIA NASDAQ 100 Index Report on February 2nd. From then to March 20th, the shares were essentially flat, posting a meager 1.4% gain, while the NASDAQ Composite rose 4.9% over the same period.

Weakening relative strength helped to keep traders from getting sucked in when the stock popped just before the earnings report as well, enabling them to avoid two days of selling pressure which have pushed the shares deep into the Red Unfavored Zone with a drop of 32 positions to 78th place. Trading in lululemon athletica (LULU) shares over the last six months shows how significant breakouts and breakdowns often mirror each other. Back in October, the shares gapped up and broke out to the upside on a spike in volume signaling increased accumulation and the start of a new uptrend. Last week, calling off a false breakout, the shares gapped down on a spike in volume, signaling increased distribution and the start of a new downtrend.

Next potential downside support appears at previous lows at $355.00, followed by $325.00 and $310.00 tests on trend. Initial resistance appears between the $400.00 round number and the bottom of Friday’s gap near $415.00.

A major breakdown is underway in lululemon athletica (LULU) shares. LULU peaked back in January and spent the winter trending downward, Earlier this month, the shares bounced up off of support near $440.00 and even staged a double top breakout. Friday’s selloff called off the false breakout, took out $440.00 and completed a bearish Spread Double Bottom pattern, signaling the start of a new downleg that has already carried the shares back under $400.00.

Previous column highs and lows suggest potential support may emerge near $384.20, then the $358.35-$365.55 zone and near $327.65. Initial resistance on a bounce appears near the $400.00 round number, then $407.85 based on a 3-box reversal.

With a bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 5 out of 10, LULU is exhibiting short-term weakness against the asset classes.

Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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