Shares of athleisure apparel maker Lululemon Athletica (LULU) are trading sharply lower Friday on the heels of Nike's (NKE) margin warning. Let's check on the charts and indicators.
In this daily bar chart of LULU, below, we can see that the shares were trading above the 50-day and the slower-to-react 200-day moving average lines earlier this month but now are well below these two lagging indicators. LULU looks pointed down for a retest of its early July and late May lows.
The On-Balance-Volume (OBV) line is also pointed down with the price action. The Moving Average Convergence Divergence (MACD) oscillator recently crossed below the zero line for a new outright sell signal.
In the weekly Japanese candlestick chart of LULU, below, we can see what could be a major complex head-and-shoulders top pattern going back two years. The shares are below the declining 40-week moving average line. There is a lack of lower shadows that might have given us confidence that the lows were being rejected.
The weekly OBV line shows a long-term uptrend in the face of weakening price action. The MACD oscillator is close to a downside crossover below the zero line.
In this daily Point and Figure chart of LULU, below, we can see a potential bearish target in the $229 area.
In this weekly Point and Figure chart of LULU, below, a lower price target of $205 is shown.
Bottom-line strategy: Some shoppers may say they can't live without the latest line from LULU, but the charts suggest maybe they should -- avoid the long of LULU.
