Lululemon Reaches New Peak Ahead of Earnings Announcement
Lululemon, a leader in athletic wear, boasts a high P/E ratio of 62.48, with its stock experiencing impressive momentum over the past year.
Lululemon Athletica (LULU) is renowned for its signature athletic apparel and accessories, notably its highly sought-after yoga pants. The recent surge in fitness enthusiasm, fueled by economic growth and rising incomes, has driven more individuals to embrace active lifestyles. (See also: Why Lululemon Stock Could Surge Over 15%: Argus Insights)
As of Wednesday, August 29, Lululemon’s stock closed at $138.70, marking a remarkable 76.5% gain year-to-date. The stock firmly resides in bull market territory, soaring 85.2% above its February 6, 2018, low of $74.90. It sits just 1.2% shy of its all-time intraday high of $140.41 reached on August 27, positioning the company strongly ahead of its earnings release.
Market analysts anticipate Lululemon will report earnings between 49 and 50 cents per share when it announces results post-market on Thursday, August 30. Credit Suisse highlights robust product momentum as a key driver, reflected in the strong upward price trend on weekly charts. However, some experts caution that the current bullish sentiment might already be factored into the stock price. A review of the weekly chart suggests exercising prudence.
Daily Chart Overview for Lululemon
Since September 1, 2017, when Lululemon closed at $61.69, the stock has maintained a position above the 'golden cross'—a bullish signal where the 50-day simple moving average surpasses the 200-day average, suggesting potential for continued price gains. This indicator has proven reliable, with significant price jumps on March 28 and June 1, driven by positive earnings announcements. Key horizontal support and resistance levels include a monthly pivot at $132.29, a semiannual value level at $115.17, an annual pivot at $106.44, and a quarterly value level at $85.51.
Weekly Chart Insights for Lululemon
The weekly chart presents a positive yet overbought scenario, with shares trading above the five-week modified moving average of $129.87. The stock remains significantly above its 200-week simple moving average of $68.77—a level last approached during the week of September 29, 2017, when it was $57.43. The 12, 3, 3 weekly slow stochastic indicator is expected to climb to 91.42 this week, signaling an 'inflating parabolic bubble,' which often serves as a critical technical alert for investors.
Based on these technical analyses, investors might consider purchasing Lululemon shares during pullbacks toward the semiannual value level of $115.16, while contemplating selling on rallies that fall below the monthly pivot of $132.29, especially if earnings trigger a negative market response.
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