🧘‍♂️ Deep Dive: LULU Just Faceplanted But Is There a Trade Setting Up in the Rubble?

What I’m Seeing After the Drop — And Where It Could Head Next

Broad Beat — But Still Got Beat Down

📆 Sunday, June 8, 2025

Hey traders and investors,

Let’s talk about Lululemon ($LULU). Yeah — that Lululemon — the name that’s usually been a poster child for premium margins and loyal customers. Well, it just cratered nearly 20% after earnings… and on the surface, it doesn’t even look like they did that bad.

So what happened? And more importantly, is it a buy after this beatdown or does this thing have more room to fall?

Let’s get into it.

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🧾 First — The Story Behind the Drop

Lulu reported Q1 earnings and basically met expectations. Revenue came in at $2.37 billion (in line), EPS hit $2.60 (beat by a penny), and gross margin even improved.

But same-store sales were flat, and operating margin declined 110 basis points to 18.5%. That doesn’t sit well when you’re priced like a growth stock.

Then came the forward guidance.

They projected Q2 EPS of $2.85–$2.90 — but Wall Street was looking for $3.32. And full-year projections? Soft. Sales growth between 5%–7%, and EPS around $14.58–$14.78, while the Street was closer to $16.

Add in some macro pressure — including concerns around tariffs — and you get a near 20% wipeout.

Now let’s drill into the chart, because this is where things really start to speak.

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📊 Technical Breakdown

Here’s what I’m seeing:

🔻 Price Action:

• Friday’s session was a massive gap down on high volume. Price dropped 19.81% to $265.27, slicing cleanly through the prior support zone around $276.

• That former support? It’s now new resistance.

• Volume spiked big — confirmation that institutions were bailing, not retail panic selling.

🟠 Moving Averages:

• The 20-day MA (red) is flat to slightly declining now — short-term trend pressure.

• The 50-day MA (blue) is above price and pointing sideways — trend flattening.

• The 200-day MA (orange) is still rolling over and well above, showing long-term trend damage hasn’t reversed.

This is not a name in recovery mode. The trend is broken.

📉 RSI:

The Relative Strength Index (RSI) is sitting at 34 — not quite oversold, but definitely heading south. That tells me momentum is fading fast, but we’re not in true panic territory yet. There’s still room to drop before buyers even think about stepping in.

🧮 MACD:

The MACD just rolled over hard. The MACD line crossed below the signal line, and the histogram flipped red. That’s a textbook bearish crossover — momentum is shifting from neutral to negative, and it’s picking up speed.

🎢 Stochastics:

The Stochastics just made a clean bearish crossover and is now sitting at 52, pointing sharply downward. That’s a warning sign — not yet oversold, but momentum is clearly shifting out of this name. If it keeps sliding toward 30, we could see more selling pressure ahead.

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🔎 Support and Resistance Levels

Support Zones

• $242.01 → Next logical support from previous base (Feb lows).

• $226.01 → Stronger, long-term demand zone.

Resistance Zones

• $276.01 → Friday’s support, now flipped resistance.

• $302.01 → Prior breakdown level, not in play unless we see a full recovery.

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💡 How I’d Play It