Were We Too Bullish on Estee Lauder?

 | Oct 12, 2017 | 12:22 PM EDT
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Estee Lauder (EL) has continued higher after our last update on the stock, where we anticipated "a 10-bagger from the $15 base would mean a $150 price target for EL. Aggressive traders could go long EL on any weakness toward the $102-$100 area, risking below $96 looking for gains to the $150-$169 area."

EL has not reached $150 but it has rallied to around $110 and has been consolidating those gains. Were we too bullish? Or is this just a pause within an ongoing rally?

Let's check the latest charts and indicators.

In this daily bar chart of EL, above, we can see how effective the 50-day moving average line has been since January in keeping us in the uptrend. The rising 200-day  moving average is also positive but well below the market. The daily On-Balance-Volume (OBV) has been rising since early April and continues to confirm the advance. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line and has narrowed toward a possible bullish crossover.

In this weekly chart of EL, above, we can see prices are above the rising 40-week moving average line. The weekly OBV line is up strongly to match and confirm the rally. The weekly MACD oscillator is in a bullish mode but the two moving averages that make up the oscillator have begun to narrow.

In this Point and Figure chart of EL, above, we can see a stock that is extended well above its $84 price target and could use a consolidation.

Bottom line: EL has been consolidating its recent gains and this could continue for a while. I would hold longs risking a close below $105.

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