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