Consumer Goods

$LULU . Once a darling.

$LULU was once a darling for the IBD.

It rides on a good wave, targeting the well-heeled and the growing yoga sports culture a couple of years back.

As a retailer, LULU’s growing income hinges on its ability to increase its store first across the nation, second the region and third internationally.

It was the International market that I have been waiting. Most companies expands real quick in the North America easily as they enjoy similarities.

However, the challenge will set in as they try to embrace International business in Europe, Middle East and Asia. All of a sudden, they find themselves lacking the strengths to expand. Or the markets outside of their core region does not embrace their products as easily.

In my opinion, LULU is in such a situation. Its growth will be slowing soon. Margins will soon be eroded. And it will heads towards the $20+.

At this moment, LULU is trading below the kumo since the breakdown of the market a month back. As it rallies back together with the general market, I see opportunities for shorts.


Creative : Up on Zii announcement but beware the volume

Creative share price run out almost a dollar on announcement of their Zii product.

While on the chart it looks extremely bullish (maybe a repeat of Palm), but on closer look we need to be very careful here.

Just look at the volume. High volume in this case is only about 150k to 170k. Secondly, if you look at June 22, there is actually a ‘high volume’ selloff.

So, for illiquid counters like Creative, there is a need to be careful. Daily trading volume is only around 11k.

It certainly does not require a lot of funds to push this counter up.

Look at the volume sold off on the chart for the day ending 31 July. A bullish stock will not have such high volume sell off.

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