Tuesday, October 16, 2007

Morning rush raises cost of lululemon

Was it the recent report, erroneous as it was, by Fortune's Suzanne Kapner that propelled lululemon athletica to announce this morning that same-store sales are going through the roof? Interesting timing, but it doesn't really matter when as much as the fact that LULU is kicking arse.

lululemon traded down for a third day in a row yesterday. At 41.13, nearly 20% off its all-time high, LULU was a great buy; the 10-day SMA is 44.90. Currently, though, LULU is trading in pre-market at 46.35, and was as high as 47.85. Quite a move for a stock that had increased short interest recently plus the pan by Kapner.

Pupule says: Wait. Great earnings revision or not, the stock is now trading well above its moving averages. Buy at your own risk, of course. My original entry point was 38, and I added more this morning — against my normal technical discipline — at 47. If LULU can hold its gains in this weak premarket and through the morning, I may hold my new shares. Otherwise, it's probably wiser to trade late in the day and wait out this storm.

No comments: