Lululemon: Has this stock shrugged off controversy?

(Click for video linked to a searchable transcript of this Mad Money segment)

Lululemon used to be a Cramer favorite until about two months ago when it plunged 14% in a single session. Is it a buy again?

Once a Cramer growth play, the Mad Money host changed his outlook on Lululemon in early June after CEO Christine Day stunned the Street by resigning from her post.

At the time Cramer said, "The chief reason for owning the stock was Day's amazing leadership."

However, two months have passed and after plunging more than 20%, shares have again resumed their march higher.

Is it time to take another look at this stock?

In these kinds of situations where the fundamentals are unclear, pros like Cramer often consult with technicians to see what the charts suggest. The following technical analysis was provided by Bob Lang, founder and senior strategist at Explosive, as well as a Cramer colleague at

Lululemon clothing on display in Pasadena, Calif.
Getty Images
Lululemon clothing on display in Pasadena, Calif.

Looking at the weekly chart, Lang sees many constructive developments.

He says following the sharp decline lower in June, Lululemon has made a move from the lower left to the upper right – a bullish trajectory.

That trajectory matters a lot because Lululemon gapped down $12, dropping from $82 to $70 literally overnight, when Christine Day announced her resignation. Technicians like Lang believe that once a stock climbs back into the area of the gap, the stock will fill in that gap, meaning it will rise all the way to the level from which it declined. At $72 and change, Lang says Lululemon is now within the gap. Lang believes the stock is on a trajectory where it should fill in the gap in the not too distant future, something that would send LuluLemon to $82 or 13% higher.

And should that happen, Lang sees more reasons to feel bullish.

It would only take a move of a few cents for LULU to break through the ceiling of resistance at $82.50, making a brand new high. Should that happen, Lang can see LuluLemon heading as high as $100.

Patterns in the daily charts appear to confirm the outlook.

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Lang says the Moving Average Convergence Divergence line or MACD is about to flash a very powerful buy signal. He also notes that Lululemon has shown strong volume on the up days and lower volume on pullbacks – that's also bullish.

Also he says the RSI has been sloping aggressively higher over the last six weeks, which suggests to Lang that the stock has upside. And for the piece de resistance – Lang believes that chart is making a cup and handle formation, one of the most reliably bullish patterns in all of technical analysis.

All told, Lang is a buyer. He thinks the charts look truly beautiful for the bulls.

Cramer thinks the analysis warrants attention. "I'm inclined to listen to what Lang has to say, his track record has been truly fantastic lately," Cramer said.

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