Estee Lauder Cos. (EL) was reviewed in the middle of October where I wrote, "EL has been consolidating its recent gains and this could continue for a while. I would hold longs risking a close below $105." With a few months of hindsight we can see (first chart, below) that EL traded sideways for the balance of October and resumed its advance. Our $105 risk level was never in play. How do the charts look now?
In this daily bar chart of EL, below, we can see that prices have appreciated nicely the past 12 months. Prices have stayed above the rising 50-day moving average line with one test in early July. The distance above the 50-day line has narrowed recently and we could see prices retest the line in the days and weeks ahead. The rising 200-day moving average line well below the market.
The volume pattern has not shown an increase since early November and the On-Balance-Volume (OBV) line has been flat since the middle of November. Both volume and the OBV line are diverging from the price action. Technicians or chartists, if you prefer, like to see volume expand in the direction of the trend. An uptrend should see stronger volume. Light or declining volume can foreshadow price weakness ahead.
In the lower panel is the 12-day price momentum study. Momentum has slowed from November to February even as prices have made new highs. This is a bearish divergence and can be a "tip off" of either a sideways pattern or a decline.
This weekly bar chart of EL, below, has some interesting developments. Prices are above the rising 40-week moving average line but maybe too far above it. In other words EL is extended. The weekly OBV line has become stalled in the past three months and this is a bearish divergence at the moment.
The trend-following Moving Average Convergence Divergence (MACD) oscillator shows that the two moving averages that make up the indicator have narrowed. This means the pace of the advance has slowed and that we could soon cross lower for a "take profits" sell signal.
In this Point and Figure chart of EL, below, we can see a possible downside price target of $126.86 and that there is not a lot of support below that level.
Bottom line: If you are long EL I would recommend taking some profits. Short-term traders might go flat. Others should consider having a sell stop below $129.