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The more I think about it, the more I realize that my “Lesson of $LULU” should rank right up there with anything else you may consider to be the most important stock market rules of trading. Last month, my tab alone received roughly 100,000 page views. So, in an egregious display of hubris, I could have easily dug my heels in and become as stubborn in my short thesis as Hank Paulson denying Lehman Brothers a bailout. After presenting an overwhelming case for $LULU breaking down on heavy volume on BOTH the daily and weekly charts, I patiently waited several days for the stock to retrace back to the breakout point. When I shorted the stock, it still went higher into earnings. I elected not to play the earnings gamble, and took my 5% loss like a man. Even after the earnings beat and massive squeeze higher, the Yoga clothes maker is continuing its move higher today.
To drive a point home, you simply must have a line in the sand where you are wiling to admit you were wrong about a trade, or else suffer these consequences…
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In other news, my $TQNT long is looking better by the minute. The stock has a strong fundamental thesis as well, seeing as it is not particularly expensive and is a key iPad and smartphone supplier. I am impressed with both the tight base over the past several weeks, as well as the big green candle today.
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you seem to have a knack for realizing when it is time to exit a trade. I recall you shorted ANV, then got out before you lost any money. Had you stayed in, you would have been stuck in a melt-up. Nice job once again with LULU
Funny but I have a better knack for selling than buying. Usually, it is the other way around for most people, as it is often said that knowing when to sell is the hardest part.
If only more people had that knack they could probably save themselves a lot of money. (Me included)
Chess,
What kind of upside potential do you see in $TQNT? Does it get better in to holiday season?
Thanks.
hubbs,
It should go much higher if tech has the traditional rally into Christmas. No reason it cannot get to $9. Fund managers will go after iPad suppliers.
thanks Chess. i got stopped out 1/2position last week and wondering about adding back at some point.
Hey Chess,
What do you think about SYNA? If you look at the chart over the past 10 months, the stock seems to be trading within a range which shows support at around $25, and resistance around $33. Today it bounced off of its $25 lows from Friday – think it could be a good entry point to pick up some shares if accompanied with a tight stop-loss? Thanks.
Like it for a trade up to 20 day m.a..
And Chess your ROVI is rising now.
see it if sticks this time
Thank you, Chessmaster flex.
Bought some TWM at the new, lower price (now 95% cash).
Has this move voided all your bearish sentiments on LULU? I know it has reclaimed averages but I’m wondering if it wlll just do a test of top again? Did the numbers strike you as so super amazing? As a wearer of the line from a small Canadian town I can’t help but think that if the women are wearing it here its maybe run its course?
thanks
ps
my first post but a sincere fan 🙂
Thanks for commenting, Zeena.
The trick with LULU is to figure out whether it is a mere fad, or rather a sustainable trend. Since early 2009, the stock had gone from $4 to $45, so I was stalking it for a big breakdown in order to short it. However, in light of their recent earnings, the price action is telling me that the breakdown was a total fakeout…for now.
I would not short the stock here for anything more than a daytrade.
hey zeena i’m canadian too (near toronto). nice to see another canuck here.
i see the opposite side of the coin. the fact that you live in a small canadian town and LULU has penetrated your area, is a testament to the brand’s strength.
http://ycharts.com/companies/LULU/eps_growth
http://ycharts.com/companies/LULU/revenue_growth#zoom=5
http://ycharts.com/companies/LULU/long_term_debt
it’s not CROX. women LOVE the brand. i like it long term.
There’s a bunch of us here. We’re everywhere… 🙂
Awesome post as always Chess!