119.12 -1.07 (-0.9%) Sell

LULU is a falling knife, continues to bleed every investor trying to catch it

13 min read

LULULEMON ATHLETICA INC. was among the worst performers on Friday. It returned -0.9% to close at 119.12. It is currently trading -26% below it's 52 week high of 162.49.

[Themes containing LULU]

LULU showed a strong down trend over the last 3 months. During this period LULU returned -23.34% and saw a maximum drawdown of -29.92%. There was a short signal during this period which returned +12.9%.


LULU has been underperforming the SP500 index in recent time, after having outperformed till 28 Sep, 2018. Over the last 2 years 11 months and 10 days, LULU outperformed the SP500 index on 51% days.

During the last three months LULU was mostly loss making and delivered on average -0.38% per day. It's best return during this period (of +5.54%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -13.37%) was on Friday, 7 Dec, 2018. There was initially a bullish trend during this period which started on 20 Sep, 2018 and went on till 28 Sep, 2018. The bullish trend returned +4.6% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -13.64% of investor capital.

On monthly basis, LULU delivered profits in more months over the last year, than losses. LULU delivered profits less regularly than SP500 index. LULU significantly outperformed SP500 index in Aug 2018, when it returned +29.16% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. LULU had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.

"Price is what you pay and value is what you get.

LULU is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in LULU's volatility from 3 Oct, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that LULU has significant positive skewness in it's return distribution. This indicates that investors can expect LULU to recover from drawdowns quickly. Which makes LULU a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in LULU derivatives at this moment can consider 'Calendar Spread' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than LULU. Therefore, SP500 must receive a lower allocation than LULU in your portfolio. LULU usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in LULU), two mid cap instruments that deserve special mention are AMD and SQ. They have significantly outperformed the overall market.

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