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Momentum investors chasing after the stock of Lululemon (NASDAQ:LULU) have been enjoying a nice ride, as the stock has been flirting with all time high. Unfortunately, I wasn't one of them. I did miss it, as I stayed on the sidelines. Rently, however, I did take the opposite side. I did short it. Here is why:

1. Imitation. As is the case with other momentum stocks like Open Table (NASDAQ:OPEN) and Netflix (NASDAQ:NFLX), Lululemon doesn't have a sustainable competitive advantage, as it has no barriers to entry to keep the competition out. Already Gap (NYSE:GPS), Nike (NYSE:NKE), and Nordstrom have developed their own yoga athletic gear, and compete head to head with Lululemon. Nordstrom (NYSE:JWN), for instance, is selling similar gear 30 percent below that of Lulumon, while "Nike and Gap offer also are following Lululemon's practice of tapping into yoga's spiritual ethos, an effort that makes customers feel that they're part of the community."

2. The cooling off effect. Lululemon's sales can, in part, be attributed to a craze that eventually fades away, as people get tired of it, or as another craze catches up with them.

3. Saturation. Not every lady on earth is going to fall for the yoga craze and shop for a new gear every other week. This means that, even in the absence of any competition, sales will taper-off, as the market approaches saturation.

4. A weak economy. Money consumers spend on yoga or any other leisure activity is discretionary. This means that a weaker economy will make a dent in yoga gear sales, especially for the high-end of the market where Lululemon caters.

5. A High valuation. At a PE of 56, Lululemon is an expensive stock compared to its peer Under Armour (UA) and Limited (LTD), which trade at a PE of 46 and 16 respectively.

The bottom line: Economic fundamentals are catching up with Lululemon's stock, which make it ripe for a descent down to earth. I will avoid it, and even consider building a short position on any upturn.

Disclosure: I am short LULU.