The DJIA is leading and breadth is better than 2 to 1 positive but much of the market is dead and doing little. The glaring weak spots are FANG and technology names. Even Apple (AAPL) is in the red today after doing much of the heavy lifting lately. Most of the favored momentum groups like biotechnology and semiconductors are weak while retail and marijuana stocks are showing the best relative strength. Canopy Growth (CGC) and Tilray (TLRY) are two pot names on the screens of traders today.
The DJIA is being led by Nike (NKE) , Pfizer (PFE) , DowDuPont (DWDP) and Johnson & Johnson (JNJ) . There aren't any real themes to the action other than dislike of technology but there is an appetite for long exposure regardless.
This is one of those days where if you are in the sorts of stocks that usually are leaders then you are probably lagging. There is very narrow action in what I consider to be good small cap setups. It is primarily a function of poor seasonality more than anything else.
Estee Lauder (EL) posted an EPS increase over last year of 20% and revenue growth of 14% which are ahead of expectations, but the company cut guidance for next quarter and the next fiscal year. Despite the guidance cut the stock is trading up nearly 4% which is a function of the market anticipating the weak news. It is likely the market expected the company to miss its numbers and is happy that guidance has not been cut more.
Estee is not a cheap stock. It is trading with a trailing PE of 30 and is expected to grow EPS by 11% each of the next two fiscal years that end in June. Someone is willing to pay a premium there but the tepid guidance calls into question why that is the case.
Technically the stock is back over its 200-day simple moving average and needs to hold that level. If it can regain $142.50 or so, it will be back over the 50-day as well. The chart is not at all compelling right now but there is hope that a bottom has formed around $130.
This combination of a high valuation and a lackluster chart would keep me on the sidelines for now.
For more on Estee Lauder, today's Chart of the Day, see: