LULU's Technicals Suggested Weakness into EPS

LULU’s Technicals Suggested Weakness into EPS

LULU reported EPS and issued forward guidance last night.

Without getting into fundamental details, the stock disappointed and is indicated to open down ~6% this morning.

In short, the technical set-up in the stock heading into EPS suggested the likelihood of such weakness.

In the chart below, LULU had broken down from a consolidation pattern over the past two weeks formed by lines (1) and (2).

Yesterday it staged a classic rally  back up to test old support line (2) as new resistance.

Should weakness persist, the stock could fall another ~25%, to ~$50, where the combo of support lines (4)-(6) stand.

Additionally, line (6) represents the bottom of a trading channel formed by lines (3) and (6).

2013-01-15 LULU - Weekly