Lululemon Athletica (LULU) slumped early Monday as traders reacted to the company's lower guidance for their holiday numbers. Let's take some charts into the changing room and see how things fit.
In this daily bar chart of LULU, below, I see a weak picture. Monday is the second time in just a few weeks that shares of LULU have gapped lower. There is a downside price gap in early December where price gapped below the 50-day moving average line. Today LULU gapped below the 200-day line. Trading volume has been pretty active since September with two large volume spikes.
The On-Balance-Volume (OBV) line shows a rise from March but also a peak in early December. The Moving Average Convergence Divergence (MACD) oscillator is bearish and below the zero line.
In this weekly Japanese candlestick chart of LULU, below, I see what could be a very large top pattern. Prices have outlined a potential head-and-shoulders top formation the past 2 1/2 years. I see a downward sloping neckline connecting the lows of 2020, 2021 and 2022. Weakness under $250 is likely to precipitate further declines.
LULU is trading below the 40-week moving average line. The weekly OBV line looks like it has weakened since August. The MACD oscillator has crossed to the downside but is still above the zero line for now.
In this daily Point and Figure chart of LULU, below, I can see a downside price target in the $249 area.
In this weekly Point and Figure chart of LULU, below, I see a price target in the $231 area.
Bottom line strategy: Keep going to your weekly yoga or exercise class but I would avoid the long side of LULU for now.
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