Strong bounce play on LULU. They announced that they were lowering their guidance for the next quarter. This is bad news, but recent prior earnings LULU already gapped and trended down 13%. Today LULU gapped down almost 11%, and the market deemed that it was extended. Today price

1. D1 catalyst -
Gap down Bounce
Day
Catalyst: Guidance down before earnings.
Setup: Gap down Bounce/Reversal day
Trades: Opening range consolidation & Trend PB
Ticker: LULU
Date: 9-1-23

2. Gameplan
What is the catalyst?
LULU lowers guidance on margin disappointment. 26% premarket volume buzz which is huge.
Gapping down 10% which is almost -4ATR.
What is the setup & intraday fundamentals?
D1 catalyst / changing fundamentals.
ATR: 8.78
What does the daily look like? Any recent/prior gap ups/downs. Has it a lot of big trend days? ATR moves? Look
for repetitive price action and similar setups!
Last earnings we had a 3 ATR gap down followed by a 2 ATR down trend day.
Earnings before that we had a gap up of +2ATR and down trend day of 1.75ATR
Big gaps have occurred plenty of times in 2022. 3ATR is still a lot, but it can trend further down, like on last
earnings.
Overall, LULU isn’t in a strong down trend. It’s more consolidating trending up.
Lulu also has shown that it’s capable of a lot of gap down reversal/bounce trend days without a consolidation.
Those were big +2ATR trend days after gaps.
Given the potential setup and catalyst, are we likely to trend or range? Above and below what key levels does a
trade2hold/trend become more likely? Consider ATR moves.
Above 308-310 we could trend to the upside.
We could trend towards the 280 which is premarket low and a HTF level. But we could also have a range day here. I
am less certain it will be a trend day. And below this level we have already moved 2 ATR and we are more
extended.
If we reclaim 308, we have better RR than we trade down 281. But we could still trend towards 280. We can be
very weak intraday.
When we reclaim 308, we have already move >1.25ATR. This is an infliction level where above we can trend. That
level is when we hold significantly above the open. A trend starts after the open so this should be the main focus
point. We could trend up, but a close near HOD would have been unlikely.

3. Key levels Identify areas of interest. These are prices
a stock will tend to trade to, after they
had a catalyst. If a stock can move through
these levels, they may have an explosive
move.
Is there an inflection level?
Support 281: premarket low and HTF level.
8.5-9/10 level.
Resistance: 308 area. This is a HTF level but
not specifically pinned down to 308, 310
would be more obvious.
Where are we likely to open? How close
are we to the next important levels in
terms of ATR?
Around 296 or so.
310 area is about 1.5ATR away.
280 premarket low is about 2ATR away.

4. Catalyst &
Fundamentals
Catalyst: lowers guidance.
Setup: D1 Catalyst, Gap down reversal
Premarket pre buzz:
Float: 112 million
Institutional Ownership: 89%
Short %: 3,4%
ATR: 8,78.
Average Daily volume (50 day): 2,3 million.
Daily volume: 8,3 million.
Gap%/Gap ATR: -10,8% / >4ATR
RVOL: >3

5. Bounce Trend
day– Trade
Strategy
Stock selection
-Stock in play with a significant (technical) catalyst, earnings report or strong/weak theme.
-Elevated RVOL above 2-3.
-News catalyst
Bounce Trend Day cue’s/variables
Extreme weakness:
- 11% gap down = -4ATR
-Plenty of consecutive red days/selling; recently had on which we gapped down 3 ATR, and trended
down 2.5ATR
-Elevated selling volume on daily.
-Preceding day(s) where a potential bottom/range is in. Massive selling seems over for at least 1 day.
-Reclaim of important key levels.
Trade2hold factors on Bounce Trend day:
- Holding above significant support levels intraday: opening range levels were held.
-Strong market, holding the lows in an uptrend OR the market has a Bounce Trend day as well.
-Very weak daily chart. No extreme selling, but in a down trend.
- Elevated RVOL.
-Strong open through resistance (8/10), or price is holding above opening range
-Strong open in extended (+1 ATR) = Room to trend intraday.

6. Trend PB - Trade2hold – Trade Management
Trade2hold - Flat
Significant 5m close above 20 EMA:
1) close on above average buying
volume;
2) a new 5m high that occurs after
close;
Goal: don’t sell more than 50%
when going flat.
Reason2hold
-Shallow volume and making lower
highs. Sometimes the trend is still
intact when there’s a significant
close above the 5m 20EMA.
Trade2hold – Exit strategy
-ATR moves: 1,5ATR or
1,75ATR.
Given prior the big ATR
moves on prior gaps, I would
want to hold the core to
1,75ATR.
Trend PB
Entry: After price pulled in 5m 9 or 20 EMA
and after a top has formed on tape:
-We can’t trade lower.
-Tape starts to get stronger.
-Bids are stepping up.
-Stronger offers get taken out.
Risk: At the bottom of the pullback.

7. Big gap price history
Gap
Gap
ATR
ATR
move
C - H in
ATR
-7,0% -2,28 2,24 -0,10
7,5% 2,11 2,48 -0,99
10,0% 3,10 1,83 -1,53
4,6% 1,32 1,19 -0,06
-7,8 -2,88 2,53 -2,21
Gap (reversal)
trend days and one
earnings day where
we reversed a
strong opening
drive and still
closed green. All
had big gaps,
elevated volume
and strong ATR
moves!
4/5 did a move
>1.75ATR. The only
day that didn’t
wasn’t significant
in volume and
gapped up <5%

8. Technical
Analysis:
Trend PB
10m holds above 9EMA,
5m holds above 20 EMA.
Shallow volume during PB
Pullback visible on multiple time
frames: 1m, 5m, 10m.
Bounce of key level: 298;
Opening range high
Elevated volume when PB
starts to work.

9. Technical Analysis:
Opening Range
consolidation
breakout
Open range: 1 ATR.
Low volume into consolidation
Holds opening range low
Elevated volume when opening
range breaks
Perfect wedge pattern.

10. Ideal Entry
-298,19 is 33% of the range from the
low of the retracement the prior HOD.
This would have been a difficult entry
due to the wick, but not impossible.
-It’s important that I prepare this level
in advance.
- The 2nd higher low provided a nice
opportunity to add and get bigger. The
consolidation volume here was very
low.

11. What could I have done
better?
• I could have prepared this setup a lot better. I took a bounce setup
into consideration into my gameplan. I even considered a bounce
trend day. But what is the extreme weakness why this stock is
oversold? What are the %-moves on the daily chart?
If I prepare for a potential bounce day, I am saying that this stock
possibly is down too much. I need to be more specific in my
gameplan and go through the playbook criteria/variables of this
setup.