Lululemon Stock: Ahead Of The Disappointment
EWM Interactive | Jan 12, 2022 12:12AM ET
Even though the stock recouped most of yesterday’s losses, Lululemon Athletica (NASDAQ:LULU) still disappointed investors with its
Wave V exceeded wave III in July 2021 and then kept going until it reached $485.83 two months ago. Business was good and the company beat both earnings and revenue estimates in the third quarter. Still, the stock price reversed to the downside.
We cannot tell whether it was simply the market reacting to the Omicron threat two months in advance. All we know is the Wave principle put us ahead of it. LULU fell to an intraday low of $323.50 yesterday, down 33.5% from the top. We don’t think the bears are done yet.
The recent plunge looks like a single wave, not three. Therefore, we believe it is just wave A of a bigger A-B-C zigzag retracement still in progress. Wave B can lift Lululemon to the resistance near $400, before the bears return to drag it below $300 in wave C. A drop to sub-$250 won’t be a huge surprise, either. In our opinion, dip-buyers should think twice before jumping on this one.
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