LULU, update

lulu jan 12 2017 blulu jan 12 2017

We caught some of these moves in real time, some we missed. Essentially it took longer than we expected for the pattern to develop.

Looking at the short-term chart on the right, there is a very clear, near perfect, a-b-c move upward into a perfect double top. This is a 3-wave structure and therefore corrective in nature. For that to be so there has to be a bigger wave A down in front of it. There is if you put the top  at the very first top AND view the first a-b-c as one single structure, wave A. If correct we are presently in wave C which should unfold in a clearly subdividable 5-wave structure, similar to the first c of A. The whole thing should become a large “”.

As a minimum we would look at the level of the 4th wave of previous degree and then the 62% retracement which is at about $33. That is not a great stretch considering the company is very much exposed to China for both its product manufacturing and sales, is trading at wishful p/e of 33 and is seeing more and more competitors entering this space. A sell.