Bad news already in the price: Buy on broker downgrade.

110 5
Current consolidation range 54-59.
We are at the bottom of this range.
This bottom also corresponds to the long term support line, visible on weekly chart below.
Stock downgraded this morning by Credit Suisse but fails to break the support.
Believe most bad news is in the price.
Short interest on the stock is significant: 23% of float - Makes short squeeze probable on any marginally good news.
Consensus is a BUY with target price at 69.
Looking at a break above the 59 resistance.
Target 66
Stop loss 54
RR 5x

评论: Every weakness towards 55 has been met with a strong rebound, such as yesterday. This validates our stop-loss at 54 and the current trading channel ($54-$59). Still awaiting a breakout to the upside on the basis of improving technical picture and a belief that “most bad news is in the price”. Short interest, as a % of float, has also been decreasing, another positive sign.
评论: Day of reckoning tomorrow as the company release quarterly earnings on Dec 7 after the close, contrary to what is indicated on the graph.
评论: Those who are not in this trade might want to take advantage of the volatility around earnings:

1. Dec 16 maturity --> Buy call $59 / Sell put $54 = -$0.51/share (indicative) = 0.89% cost

2. Jan 20 maturity --> Buy call $59 / Sell put $54 = -$0.56/share (indicative) = 0.98% cost
交易开始: Expected break to the upside has taken place as expected on the earnings, and under the scenario where all the bad news is in the price. The current volume after the first half hour of trading is already twice the average daily volume, pointing to significant institutional interest. Previous resistance at 66 has become support. Keep long with a stop-loss at 66. Those who put on the options strategy should exercise the calls and keep the shares.
交易结束:到达目标: - Stopping this thread/idea and starting a new one;
- Assuming a long position at 60
- Assuming all put premia cashed in
- Assuming calls exercised
Congrats...Great jump to $72. I sold all at $71 for a 28% Gain. I think I will watch from the sidelines and see what happens at the earnings.

I wish all my trades were like this!
HAL9000 MunTrader
@MunTrader, well done ! Thanks for following !
At 58.98 on the intraday high of yesterday, LULU touched, failed to break and therefore just re-confirmed the significant 59 resistance.
I'm in agreement with your idea, and was thinking along the same lines. I will add one caveat. Both the 100 SMA and the 200 SMA are converging at $66. I would buy here, and watch at $66. It may stall out there. Still a good run from $54 to $66.
+1 回复
HAL9000 MunTrader
@MunTrader, Agreed. SMA200 slightly >66 provides resistance, confirmed by the convergence you talk about - Hence my $66 target. The tricky part will be to clear the 59-60 area which shows multiple resistances on 3 main time frames (D, W, M). I believe the earnings on Dec 14 might provide the needed catalyst for an upswing. Currently still long at $55.50.
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