Shares of e.l.f. Beauty (ELF) were sharply higher Wednesday as traders and investors reacted to "blow out" quarterly results. Let's check the charts and update our strategy.
In this daily bar chart of ELF, below, I can see a strong upward trend over the past twelve months. Prices did correct lower in July as per my July 18 review but the rally resumed in short order. Today's gap higher refreshes the uptrend and emboldens the bulls.
ELF trades above the rising 50-day moving average line and above the rising 200-day line. I would consider ELF as extended (overbought) should it reach twice the level of the 200-day line or around the $156 area. The trading volume has been strong since late May.
The On-Balance-Volume (OBV) line should make a new high for the move up today to continue its year-long rise. The Moving Average Convergence Divergence (MACD) oscillator is turning upwards to a fresh outright buy signal.
In this second daily bar chart of ELF, below, I have updated the chart used in my July 18 review. I only want to draw attention to the 12-day price momentum study in the lower panel - it still shows a weakening momentum picture and a bearish divergence when compared to the price action.
In this weekly Japanese candlestick chart of ELF, below, I can see a mixed picture. The trend is up but here too the 12-week price momentum study is weakening.
In this daily Point and Figure chart of ELF, below, I can see a price target in the $193 area. Point and Figure charts do not show gaps.
In this weekly Point and Figure chart of ELF, below, I can see the same $193 price target.
Bottom line strategy: Traders who did not sell all their ELF longs should continue to hold those longs. Raise stops to $112. I do not get the sense that ELF will make an island reversal but in this market you never know. Stay alert and stay nimble.
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