Lululemon Athletica
Lululemon Athletica (LULU) shares fell in after-hours trading on Thursday, dropping more than 2% before the bell on Friday after the company issued negative forecasts for the holiday shopping season. Although the company’s third-quarter earnings came slightly above Wall Street’s expectations, its holiday guidance did not meet forecasts. The company expects sales in the range of $3.14 billion to $3.17 billion, which is below analysts’ expectations of $3.18 billion.
Since Lululemon shares returned to the upper trendline of the ascending triangle in late October, the stock price has risen sharply. If more post-earnings selling occurs today, keep a close eye on the $420 level that finds support from the previous peak in mid-October and the upward 50-day moving average. In the long term, the $480 level near the all-time high of the stock should also be monitored.
Alphabet
Alphabet (GOOGL) shares rose 5.3% on Thursday after the company unveiled its new artificial intelligence model, Gemini. The company stated that its advanced AI technology has more sophisticated thinking capabilities and operates at a higher degree of complexity than previous models. The company plans to release three versions of the technology designed to work across everything from data centers to mobile devices.
Over the past six months, Alphabet shares may have formed a diamond top pattern, which can signal a market top and potential reversal. Thursday’s price movement saw the stock rise above the 50-day moving average before finding resistance at the upper trendline of the pattern. Investors should watch for breakouts in either direction for additional signals on future price direction.
GameStop
GameStop (GME) shares, a physical video game retailer known as a meme stock, rose 10% on Thursday after posting third-quarter results that exceeded expectations and changing its investment policy. The company reported a net loss of one cent per share, better than the expected loss of 8 cents. The narrower loss was primarily due to cost-cutting measures and a 12.8% increase in European sales due to improved supply chain conditions. The company’s quarterly report noted that CEO and Chairman Ryan Cohen will oversee GameStop’s investment plan and has the authority to invest trader funds in stocks instead of debt only in the short term.
After GameStop’s stock price fell below the 50-day moving average, prices rose again during Thursday’s trading session, closing above the previous day’s high, forming a bullish engulfing pattern in the process. Investors typically view this price pattern as an indication of potential upward momentum, especially if it occurs after a long period of decline. The potential for breakouts above the prominent descending trendline that has been in place since last August should also be monitored.
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