Estee Lauder (NYSE: EL) manufactures and markets skin care, makeup, hair care and other products. The company is also a significant player in the fragrances business and as such sells a variety of the more famous male and female colognes/perfumes.
The cosmetics/personal care industry which Estee Lauder (NYSE: EL) belongs to is classified as non-cyclical. Non-cyclical stocks are typically more sought after during times of economic slowdown as sales of these types of companies tend to hold up better than those of more cyclically exposed firms.
The weekly chart dating back to 2008 shows the sharp move higher which the stock price of Estee Lauder (NYSE: EL) undertook over the past two years. The white lines indicate that uptrend is still in place despite the recent price correction in the stock.
On the daily chart looking back to November 2010 note the support line near $86 which Estee Lauder (NYSE: EL) has bounced off from several times so far in 2011. Also note the 200 day simple moving average (blue line) which the stock is currently battling with. Historically this stock has respected its 200 day simple moving average well as both support and resistance. Should Estee Lauder (NYSE: EL) again be able to overcome the 200 sma the probability of moving higher increases significantly.
On the close-up chart of Estee Lauder (NYSE: EL) looking back to early July note the higher low that has formed (white up-trend line) earlier this week, coupled with the rising stochastics indicator.
The trade I see setting up here is to go long around $93 with stops near $88 or for those that want to give this one a longer leash $86 may also work. Initial profit targets can be placed near $97 and second profit targets if applicable near the $100 mark.
