For shorts, you got squeezed. And squeezed badly. There's no way you will recoup your losses. This is long term winner. Cover now before this goes higher.
For longs, take profits now. The magnitude of this short squeeze has been way overdone. We've blown by major technical support/resistance levels in the last 2 weeks on no news of note. The hedge funds will start taking profits given we've run nearly 14% in two weeks (again, on no news of note). Take profits before LULU gets a raid for the Big Boys to take profits. Look for this to retest its 200 day moving average of $67.86 (that's a nearly 5% decline from yesterday's close of $71.34). Save yourselves and your portfolio a few percentage points. Take the advice of a former trader.
Full disclosure, I have no position in LULU at this time, but depending on how this trades in the next few days, I will most likely go short until the $68.50 range.
OK, your advice to shorts is to cover while you potentially short in the next few days. Sorry friend, the advice does not jive. Kind of sounds like prop it up more so folks like you can enter your short close to resistance. Monthly options expire tomorrow and this has been gamed up.
You are right, recent short term traders got burnt. She's dropping now though as I type so, so much for that.
Sentiment: Strong Sell
I only advised those who are currently short to cover, because you never know what's going to happen with options expiration. Considering its my opinion that LULU is currently being manipulate upward, I don't think it's prudent to risk this jumping on options expiration. My plan is still to short following options expiration,
Thanks for the advice! Long term, retail firm stocks always fall. Every one of them have their heydays, but eventually they all fall (unless they get bought out). With a 10.25 billion market cap, LULU needs to be cut by 2/3 to get any interested buyers. LULU has been profitable for too long due to a lack of any competitors in the yoga market. However, competitors have taken notice and have been rushing into this market. Nike and Gap both started their own yoga segments and have much stronger capital and brand equity. Like with all other profitable retail segments, NIke and Gap will dominate through price cutting and stronger brand equity. LULU's high P/E might have been justified in the past due to its strong profit margins, but with more and more competitors entering this space, look for those margins to shrink. I've been long term (10+ years) short PSUN BEBE HOTT COH ANF. Retail stocks come and go. Got to think LONG term. Always money makers. Short at the peak and wait a couple of years. LULU's time peak has past. TIME TO SHORT :)
Sentiment: Strong Sell
Interesting points. I've always been a LULU believer, but I have to agree with you that margins will suffer with with the entrance of Nike and Gap. I found it interesting that Lone Pine decided to take a 5% passive stake in LULU considering so many looming headwinds. Lulu has one of the strongest retail fan basses, but it's prices as simply ridiculous. That needs to change. Now that Nike and Gap have both decided to enter the profitable yoga segment, Lulu will need to lower price dramatically or risk lossing its loyal fan base. Nike and Gap will undoubtedly try to steal as many loyal customers in the first few years of their respective programs by undercutting competitor prices. In that process, LULU's p/e should trickle down to the low 30 range (from 38) in the next 52 weeks. From there, we'll have to see how LULU responds to more competition. Up until now, it has pretty much been the only major player in this market.