Stock Market Mentor

Here’s how we trade Lululemon and Victoria’s Secret – September 3, 2026

Dan Fitzpatrick
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Key Technical Takeaways

  • Avoiding Late Short Positions: Shorting equities that have already experienced massive after-hours earnings declines (13% to 20%) carries poor risk-reward parameters due to imminent bounce potential.

  • VWAP as the Institutional Threshold: An asset trading above its daily Volume-Weighted Average Price confirms that institutional algorithms are actively buying, providing the baseline criteria for bounce entries.

  • Psychological Price Levels: Major round numbers like $100.00 on $LULU frequently act as institutional accumulation floors following steep sell-offs.

  • Multi-Timeframe Analysis (MTFA): Combining 1-minute, 5-minute, 15-minute, and 1-hour timeframes allows traders to filter opening-bell noise and identify actionable intraday setups.

The Mechanics of the 59-Minute Bounce: Trading Gap-Downs in $VSXY and $LULU

When prominent retail equities suffer severe post-earnings sell-offs, retail traders frequently panic or attempt to chase short momentum at the opening bell. However, selling into an asset that has already dropped 15% to 20% overnight exposes capital to sudden short-covering rallies and bad fills.

As market technician Dan Fitzpatrick outlines, professional traders approach oversold gap-downs by looking for structural stabilization rather than chasing downside momentum.

Multi-Timeframe Analysis and the VWAP Floor

To evaluate whether a heavily discounted stock like Victoria’s Secret ($VSXY) or Lululemon ($LULU) is forming a buyable bottom:

  1. Utilize Multi-Timeframe Analysis (MTFA): Begin the session watching 1-minute and 5-minute charts to observe initial opening volatility, then zoom out to 15-minute and 1-hour charts as the morning range settles.

  2. Track the Volume-Weighted Average Price (VWAP): The VWAP line represents the true benchmark of institutional activity during the session. If price remains below VWAP, institutions are continuing to distribute shares, and long entries must be avoided.

  3. Confirm the Reversal Trigger: When price action cleanly crosses and holds above the daily VWAP, it signals that institutional algorithms are absorbing supply, providing the entry signal for a short-term bounce trade.

Respecting Psychological Support Levels

In extreme gap-down scenarios, major price levels serve as natural liquidity zones. For Lululemon ($LULU), dropping toward the $100.00 psychological floor creates an enticing entry point for value-oriented institutions.

By demanding VWAP confirmation and managing risk around established intraday low floors, active traders can capture mean-reversion moves without taking on unhedged downside exposure.