During Wednesday's Mad Money program Jim Cramer told viewers that he would be a buyer of Lululemon Athletica (LULU) . In our last review of LULU on Sept. 4 we wrote that, "This week's candle pattern -- a shooting star -- probably marks a high for LULU. Candlestick reversals can mean a change in trend from up to sideways and not just up to down. This might be the case with LULU as most of the indicators are still positive. Prices are correcting but don't get too bearish."
Well, the shares made a new low for the move down Thursday morning so let's check on things again.
In the updated daily bar chart of LULU, below, we can see that the shares have reached the approximate midpoint of a band of support from $320 to $280 from June and July. Weakness below the midpoint typically can lead to a break of the entire support zone. Prices are below the 50-day moving average line and the average is poised to turn lower. The 200-day moving average line is still rising and interests closer to $260.
The On-Balance-Volume (OBV) line has turned lower from late August and tells me that sellers of LULU have become more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has crossed below the zero line for an outright sell signal.