Estee Lauder Companies Inc (NYSE: EL)

The Estée Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. The company’s skin care products include moisturizers, serums, cleansers, toners, exfoliators, acne and oil correctors, sun care, and eye and body care products; and makeup products consist of face, eye, lip, and nail products, as well as related items, such as compacts, brushes, and other makeup tools. It also offers fragrances products for women and men in various forms, including eau de parfum sprays and colognes; lotions, powders, creams, candles, and soaps; and hair care products comprising hair color and styling products, shampoos, conditioners, and treatment and finishing sprays.

Take a look at the 1-year chart of Estée (NYSE: EL) below with added notations:

1-year chart of Estée (NYSE: EL)

EL has been trading sideways for the last 3 months, while forming a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. EL’s rectangle pattern has formed a $90 resistance (red) and a $86 support (green). A break above $90 would also be a new 52-week high.

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The Tale of the Tape: EL is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $86, or on a breakout above $90. The ideal short opportunity would be on a break below $86.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach