Sold 140 LLL.TO@ $40.00, Breakeven

Update at Noon: Looks like I am wrong. LLL.TO is testing its recent high at \$40.50. However, volume is rather low up to now. I'm out my Lululemon (LLL.TO) position because of market softness. Bonds (TLT) are holding a support level. EUR/USD is struggling to hold above 1.27. And the oversea markets (Asia and Europe) are weak overnight. Perhaps the market is getting ready to catapult up. Perhaps it is not. But I'm not going to place my bet on anything as I don't have a clue where it's about to go at the moment. So I am stopping out of this position at breakeven. Preserving capital. Moreover, recent price move in Lululemon (LULU on Nasdaq) is disappointing. Despite the market marking new consecutive highs for the past few days, LLL is stuck in a rut as shown in Figure 1.

[caption id="" align="aligncenter" width="570" caption="Lululemon (LLL.TO) intraday"][][][/caption]

Purchase price of these shares were \$39.86 from a week ago.

Exact return is (\$40 - \$39.86) * 140 = \$19.60 - \$9.90 commission = \$9.70. In any case, I'm all cash in my account now. At least I've free myself from the market for the next two weeks during my trip to Hong Kong. Here's an updated view of the daily chart of LLL.

[caption id="" align="aligncenter" width="570" caption="Lululemon (LLL.TO)"][]1[/caption]

Posted 14 July 2010 in stocks.

Bought 140 LLL.TO @ $39.86

The market may be initiating a bear rally again according to the breath indicator of Figure 1. We are seeing a positive divergence from the upticking companies above 50-dma/200-dma ratio (solid line in main graph) and the lower low on the TSX. Furthermore, TSX index price has been holding a longer term support at 11000 despite a new recent low on the number of companies above their respective 200 day moving average (top indicator) . The CDNV to TSX ratio is also showing a similar positive divergence.

[caption id="" align="aligncenter" width="570" caption="Toronto Composite (\$TSX)"][][][/caption]

Thus, I am taking a bullish step with a cautious long position in Lululemon (LLL.TO). There's a strong uptrend in this one as shown in Figure 2. \$37.50 looks like a long term support. However, my stop is \$38-\$39 zone to be in sync with the market move. Also, the gap to \$37.50 support has been closed previously already in May, so a second re-test wouldn't bold well for LLL.

[caption id="" align="aligncenter" width="570" caption="Lululemon Athletica (LLL.TO)"][]1[/caption]

In addition to the chart, LLL currently has an enormous 22.79% short floats according to Finviz. It is 70.51% owned by the big money with a 3.72% increase in holding in the last quarter. Short squeeze, anyone?

I took timed my entry based on intraday chart Figure 3. The top gap today held for the first hour at least and then there were some increased volume at the intraday support. I entered then.

[caption id="" align="aligncenter" width="570" caption="LLL.TO intraday chart"][]2[/caption]

However, LLL touched \$40 and is now retraced below \$39.50.

My mental stop is \$39.00 and my hard stop is \$38.50.

That is a risk of (\$38.50 - \$39.86) * 140 = \$190.40 + \$9.90 commission = \$200.30 = 2.13%.

Posted 06 July 2010 in stocks.