Estee Lauder Cos. (EL) made a high on the charts last month but was really punished yesterday with a steep selloff and heavy volume. Did this come out of "left field" or were there some subtle signs that selling had increased? Let's look closer.
In this daily bar chart of EL, below, we can see a long and durable, until recently, uptrend. Notice how nicely EL stayed above the rising 50-day moving average line? A thing of beauty until two days ago when price closed below the average line.
Moving averages smooth the data and lag the price action but look at the On-Balance-Volume (OBV) line. Notice that the line peaked in March and that sellers of EL have been more aggressive for the past two months.
Now look at the 12-day price momentum study in the lower panel - momentum peaked back in November and slowed for months.
In this weekly bar chart of EL, below, we can see that prices had doubled from early 2017. Prices are still above the rising 40-week moving average line but that may not last.
The weekly OBV line turned down last month and the weekly Moving Average Convergence Divergence (MACD) oscillator crossed to the downside for a take profits sell signal (a sell signal when the stock is in an uptrend).
In this Point and Figure chart of EL, below, we can see that prices have already reached a downside price target. Prices can be overrun and in this case there is not much nearby chart support.
Bottom line: EL has declined sharply the past two weeks even though Wednesday's price action was more eye catching. Spillover selling towards $125 where the rising 200-day moving average line intersects would not be surprising in the short-term. Support could materialize around $125 but I would not be the first bidder.