Lululemon Athletica Inc. (LULU) released their latest quarterly results Thursday night. Earnings in the fiscal second quarter were $0.96 cents a share, up from $0.71 a year earlier and ahead of analysts' forecasts of $0.89. Revenue rose 22% from a year earlier to $883.4 million and beat estimates of $846 million. Same-store sales in the quarter jumped 15%, beating estimates of 12.2%.
LULU is trading around $200 Friday morning. When we looked at the charts of LULU the other day the Point and Figure chart suggested weakness. We wrote that, "Traders and recent longs might want to consider lightening long positions as a correction to the $150 area could unfold in the weeks ahead." Another reminder that no investment methodology is perfect.
Let's check out the charts again this morning.
In the daily bar chart of LULU, below, we can imagine that prices are trading at a new high and well above the rising 50-day moving average line as well as the slower-to-react 200-day line. The sideways or neutral On-Balance-Volume (OBV) line, which we saw the other day, could break out to a new high Friday if volume is heavy enough.
The Moving Average Convergence Divergence (MACD) oscillator, which was below the zero line the other day, may cross above it Friday.
In the weekly bar chart of LULU, below, we can see some improvement with Thursday's rally. Prices are still above the rising 40-week moving average line but the weekly OBV line has notched a new high.
The MACD oscillator narrowed toward a possible or eventual bullish crossover.
In this Point and Figure chart of LULU, below, we have the benefit of Thursday's rally and new upside price target of $201 -- about where prices are trading this morning.
Bottom-line strategy: With LULU trading near its Point and Figure target early Friday I see no reason to make a recommendation other than if you happen to be long you may consider booking some profits.
