Lululemon Hammered After Guidance; Holds Support

LULULululemon Athletica (NASDAQ: LULU) announced that quarterly net income rose to $46.6 million, or 32 cents per share, from $33.4 million, or 23 cents per share, in the same period last year. Analysts had expected a profit of 30 cents per share. Revenue increased to $285.7 million from $186.8 million. Analysts expected revenue of $274 million. The company guided future earnings of 28 cents to 30 cents per share on revenue of $273 million to $278 million in the current quarter, below analysts' estimates. For the full year, the company also provided guidance of earnings per share of $1.55 to $1.60 on revenue of $1.32 billion to $1.34 billion.

The stock price gapped lower on the open, as traders were disappointed with guidance.  The stock price held support near the 150-day moving average near$63.50, and bounced to close higher although still down more than 7% on the trading session.  Resistance is now seen near former support now resistance near $66.00.  The stock is likely to test the gap created on the open between Wednesday close of $70, and the open near $64.50.

Momentum on the stock price is negative with the MACD (moving average convergence divergence index) printing near -.50.  The MACD created a sell signal were the spread 9the 12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread.  The RSI (relative strength index) which measures over-bought and over-sold levels is printing near 33, which is on the low end of the neutral range.  Volume on LULU increased dramatically, confirming the break down and moving above the 50-day moving average of volume.

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