LULU needs to break above ~350 to show momentum and break of resistance (prior support in wedge) before we can call bullish. Even then, we will need to test the all-time high of 400 before going fully bullish. Until these points, anticipate downside or further horizontal movement...
Despite being near oversold on the daily, if we zoom out to the weekly and monthly timeframes:
- weekly consolidation is well underway, but we're dangerously near closing below the 284-287 lows from June and September.
- monthly consolidation has just begun. If we are going to see a change in trend, the weekly levels above need to hold. Otherwise, the next level of support is all the way down at $177/share (or $128 if you count the lower wick on the COVID low). These values are 36% and 54% below today's current value ($285)!!
Thus, if we don't immediately confirm a daily uptrend leading to a weekly uptrend and confirmed support around this $285 level, then we will look to the downside and towards setting a monthly higher low above $128 and then for monthly consolidation to begin as the most likely scenario (given the size of the move). At this $128 value, LULU would be worth half of the 37 Billion market cap (and 27.5B EV) it is worth today... which at $4B in revenue and $1B in EBITDA is actually a not too unrealistic a valuation of ~14x EV/EBITDA.
I'll be looking to re-up if we see a confirmed uptrend here above $285, otherwise I'm scared to say that I'll be looking to buy once we're back under $200 (with the wildcard being that $266 (pre-COVID high) may act as support).
Lots to watch in LULU these days...