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Lululemon, Ulta, Costco Move Late; Facebook Is A Buy

Dow Jones futures rose modestly early Friday morning, along with S&P 500 futures and Nasdaq futures. Lululemon Athletica (LULU) and VMware (VMW) rallied on strong earnings, while Workday (WDAY), Costco Wholesale (COST) and Ulta Beauty (ULTA) fell despite topping EPS views. Meanwhile, Facebook (FB) broke out into buy range on light volume — or did it?

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Lululemon has been one of the hottest stocks over the past year, while Workday, Costco and VMware have flirted with buy points. Ulta Beauty has been rebounding in recent months.

Dow Jones Futures Today

Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures were up 0.1%. Nasdaq 100 futures climbed 0.2%.

During Thursday’s session, the Dow Jones fell 1% as President Trump imposed steel and aluminum tariffs on the European Union, Canada and Mexico, which all announced retaliatory tariffs. The S&P 500 index fell 0.7% and the Nasdaq composite dropped 0.3%.

Facebook Stock Breaks Out

The social networking giant was a notable price winner in Thursday’s stock market trading. Facebook stock rose 2.2% to 191.78, clearing a 188.42 buy point. Volume was 19% below normal. Investors should look for stocks to break out in volume that’s at least 40% to 50% above average.

However, Facebook’s average volume over the past 50 days has been inflated by the Cambridge Analytica scandal. Investors dumped shares in massive trade in late March, then bought up Facebook stock furiously in April, before trade began settling down.

Thursday’s volume was roughly 30% to 50% above pre-scandal levels. It was also the strongest since May 2.

Another bullish sign: Facebook’s relative strength line, which tracks a stock’s performance vs. the S&P 500 index, hit a record high, providing bullish confirmation of the breakout. The RS line had lagged from early November to late March, and really hadn’t made headway since last July. 

Facebook shares rose slightly in late trading amid reports that it will announce exclusive streaming news shows from Fox News and others.

Lululemon Stock

The yogawear retailer’s earnings leapt 72% while revenue climbed 25%, both easily topping first-quarter views. Lululemon comparable sales soared 20%, helped by a 62% surge in online and other direct sales.

Lululemon stock rose 6.2% late after edging lower in the regular session. Shares have soared since the Q4 2017 report and more than doubled from a year earlier.

Lululemon Athletica boasts a best-possible 99 Composite Rating It’s been an IBD Leaderboard stock since early February.

Workday Stock

The cloud-based software maker — which has expanded from human relations and payroll offerings to financial management — topped EPS and revenue views. But Workday sees full-year subscription revenue in line with consensus.

Shares fell 3.3% in late trading, suggesting a move below their 50-day moving average.

During Thursday’s session, Workday stock rose as high as 134.08, briefly retaking a 133.66 double-bottom buy point, but reversed to close down 0.6% at 130.96. Workday initially broke out on May 8, but volume was light.

Costco Stock

Costco Wholesale earnings and revenue modestly topped Zacks Investment Research estimates, but the warehouse membership chain missed some sales estimates. Shares fell 2% late. During the regular session, Costco hit 200.70 intraday, just clearing a 198.98 flat-base buy point. But the stock closed down 0.7% at 198.24.

Ulta Beauty Stock

Ulta Beauty earnings rose 32%, with sales climbing 17% to $1.543 billion. But the cosmetics and beauty salon retailer gave weak Q2 guidance.

Ulta Beauty stock tumbled 5% late. During the regular session, shares fell 2.6% to 246.91. Ulta stock had rebounded from early March to late May, but was still well off its June 2017 peak.

VMware Stock

The cloud-based virtualization software specialist reported better-than-expected earnings. VMware rose 3.3% late. Shares closed down 0.4% at 137.48, working on a 145.25 cup-with-handle buy point.

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