Is Lululemon Setting for a Break Out?

Published on Tuesday, 08 January 2013 08:40 Written by TradersHuddle Wire

New York, January 8th (TradersHuddle.com) - Lululemon Athletica Inc. (NASDAQ:LULU) closed the trading day at $71.10, near its 50 day and 200 day moving averages set at $71.82 and $69.11 respectively. Lululemon's price action placed the stock above the 200 day moving average but below its 50 day moving average, a setup that signals a possible break out.

Lululemon Athletica Inc. (NASDAQ:LULU) designs and retails athletic clothing. The Company produces fitness pants, shorts, tops and jackets for yoga, dance, running, and general fitness.

Lululemon seems to be setting up for a tight range between the 200 day moving average as support and the 50 day moving average serving as resistance.

A tiered approach, appears to be the best strategy to maximize possible movements in the stock, as traders could establish a small position in Lululemon and wait for the stock to break out above its 50 day moving average at $71.82. Then they could add to the position as momentum builds with the breakout. On the flip side, if support being referenced at the 200 day moving average set at $69.11 breaks, it could signal further downside pressure for Lululemon.