The price target of cosmetics firm Estee Lauder (EL) was lowered by a sell-side firm Thursday. In our May 3 review of EL we wrote that "In our October 26 review of EL we gave a $374 price target, which was reached before prices turned lower. With the weak technical picture now traders should avoid the long side of EL as we anticipate lower prices ahead."
We gave downside price targets of $231 and $195 from the Point and Figure charts.
Let's check the charts again.
In this updated daily bar chart of EL, below, we can see a bearish setup despite prices approaching a Point and Figure target of $195. EL is in a downtrend and trades below the bearish 50-day moving average line as well as below the bearish 200-day line. The trading volume has increased since early August as traders seem to be voting more with their feet.
The On-Balance-Volume (OBV) line has made a new low for the move down and tells us that sellers of EL have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of EL, below, we see the path of least resistance to be down. Prices trade below the negatively sloped 40-week moving average line. There is no bottom reversal pattern to give encouragement and no lower shadows.
The weekly OBV line and the MACD oscillator are bearish.
In this daily Point and Figure chart of EL, below, we can see that prices reached and exceeded a downside price target of $212.
In this weekly Point and Figure chart of EL, below, we can see a lower price target in the $111 area.
Bottom line strategy: The charts of EL need more than a surface makeover. Continue to avoid the long side of EL.
