Estee Lauder Cos. (EL) was reviewed back on May 18, when we wrote, "Continue to hold longs and buy more... Raise stops to $281 from $259. The $392 area is our price objective after $360."
Prices rallied to $347 by early September and have corrected lower in recent weeks. So, let's check the charts of the cosmetics maker, which is a holding of Action Alerts PLUS.
In this updated daily bar chart of EL, below, we can see that prices declined into October to successfully test the rising 200-day moving average line. It looks like trading volume increased on these tests, telling us that technically oriented traders have voted with their feet -- volume is the weapon of the bull. Prices have rallied above the 50-day moving average line. The On-Balance-Volume (OBV) line weakened in September and now looks like it has steadied. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside early this month for a cover shorts buy signal. Crossing the zero line will be an outright buy signal.
In this weekly Japanese candlestick chart of EL, below, we can see a number of lower shadows in late September and early October as traders tested the 40-week moving average line and rejected the lows of the week. The OBV line has moved higher the past four months and looks stronger than the daily line. The MACD oscillator has narrowed in October and could soon generate a new buy signal.
In this daily Point and Figure chart of EL, below, we see an upside price target of $374.
Bottom line strategy: Continue to hold longs from previous recommendations. Raise stops to $305 now from $281. Our new price target is $374.
(EL is a holding of Action Alerts PLUS . Want to be alerted before the portfolio buys or sells these stocks? Learn more now . )
