I recently got an email from a Real Money subscriber that was both a thank you and a request. He thanked me for my recommendation on e.l.f Beauty (ELF) back on June 8, 2022, when I first recommended the long side of ELF. In subsequent reviews I upped the price targets and sell stops.
In my May 23, 2023, review I wrote, "I just gave you a bullish analysis of ELF but my recommendation is to become a scale-up profit taker on ELF in the $113 to $120 area. This is the area from the weekly Point and Figure target to double the level of the 200-day moving average line."
Prices are in my target zone for profit-taking, so what am I thinking now, the subscriber asked? Let's review the latest charts and indicators to find out.
In this daily bar chart of ELF, below, I can see that prices have climbed higher into the profit-taking zone I discussed in late May. Prices trade above the rising 50-day moving average line and above the rising 200-day line. The trading volume has declined from the spike up in late May. The On-Balance-Volume (OBV) line has moved up to a new high but it looks like it has been a struggle in recent weeks. The 12-day price momentum study in the lower panel shows a pattern of lower highs from early June. Lower highs mean the pace of the advance is slowing and this is a bearish divergence when compared to the price action. One reason why the pace of the advance is slowing is that investors may be taking profits on longs purchased at lower levels.