Earnings Play: Estee Lauder

Estee Lauder's price is at the top of an ascending wedge pattern, here's how to play it.

Trader 1

On Thursday, before market, Estee Lauder (EL) is expected to release fourth quarter LPS of $0.20 compared to an EPS of $0.64 the prior year on sales of approximately $2.4 billion vs. $3.6 billion last year. Estee Lauder is the world leader in the global prestige beauty market and on August 13th the Co announced a joint development agreement with Atropos Therapeutics, a developer of senescence modulating chemicals, in an effort for the company to enter the botanical skin care space. 

Looking at a daily chart, Estee Lauder's stock price is advancing within an ascending wedge pattern that began as an uptrend in mid-March. The RSI is in overbought territory sitting at 73. Since August 13th, after price reached the top trendline the candle sticks have been forming spinning tops with short tails. These candle sticks represent very low price fluctuations in the daily movement which could mean that the buyers have dried up. Given that price has reached the top trendline of the ascending wedge pattern, along with the overbought RSI reading and spinning top candle sticks, the set-up is bearish. Price will likely pull back to the 199.00 support level. If price breaks below 199.00, it could see further decline to 192.00. However, if price breaks above resistance at 217.00, it could be looking to retest the all time high at 220.00.         



Source: GAIN Capital, TradingView

More from Earnings

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.