Retail can be a hard game, as the vast majority of retail stocks are in significant downtrends. However, there are a few that continue to perform. I like the price action on Lululemon (LULU) as it continues to expand the component of men's wear and broaden out the clothing lineup in their stores.
The SCTR ranking for LULU has been pinned near the top for the last two years, with two pullbacks. The stock continues to be one of the top movers. LULU's relative strength, in purple, continues to outperform, while the weekly full stochastic appears comfortable up around the 80 level on the weekly chart. As price approaches $200, there continues to be rising lows and rising highs on the stock. LULU does not report earnings until August 29th, but the chart looks to be in a position where it could ramp up to the top of the channel over the next two quarters.
The PPO indicator, which is moving above the red trend line, suggests the stock might be ready for another push higher from here. If the overall market pulls back, I think LULU is still nicely positioned as one of the strongest charts in retail.
Catch the Market Buzz show at 10:30am ET Wednesday and Friday morning on the StockCharts TV livestream for more ideas on how to look for strong stocks.
Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts For Dummies
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