In his "No-Huddle Offense" segment of Mad Money Wednesday night, Jim Cramer said there is one big takeaway from listening in to the conference calls of Clorox (CLX) , Ralph Lauren (RL) and Estee Lauder (EL) and it is advertising . Advertising is all about digital and direct-to-consumer these days. Cramer said all three companies talked about their online advertising spending this quarter and Estee Lauder is relying more on celebrity influencers to expand the reach of its brand. Let's check on the charts and the celebs.
In this daily bar chart of EL, below, we can see that prices have largely traded sideways the past twelve months. Weakness to the $130 area and more recently the $125-$120 area have been bought. Rallies to around $155-$160 have capped the upside. Sideways trends eventually come to an end so it is important to look beneath the surface for clues. EL started to rally from the middle of December after prices successfully retested the October lows. EL rally above the now bottoming 50-day moving average line and the flat 200-day line. Last week EL gapped above the 200-day line on heavier than average volume. Prices have so far stopped short of making new highs. Beneath the surface we can see that the daily On-Balance-Volume (OBV) line has been rising the past year telling us that buyers of EL have been more aggressive despite prices moving sideways. The Moving Average Convergence Divergence (MACD) oscillator has crossed above the zero line for an outright go long signal.
In this weekly bar chart of EL, below, I can see a positive alignment of my favorite indicators. Prices are above the bottoming 40-week moving average line. The weekly OBV line has turned up and is close to making a new high for the move up. A new high in the OBV line would help to confirm the price strength. The MACD oscillator has crossed to the upside for a cover shorts buy signal. A cross of the zero line is not that far away.
In this Point and Figure chart of EL, below, we can see a breakout at $153.96 and a bullish upside price target of $216.89. A trade at $158.62 will be another breakout trade or trigger point.
Bottom line strategy: EL is consolidating its recent gains but a push to new highs is likely in the near-term. Aggressive traders could go long at current levels risking a close below $140. $200 and $217 are the longer term targets.