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This make-up stock is forming a promising chart pattern, says Katie Stockton

This make-up stock is forming a promising chart pattern, says Katie Stockton

CNBC23-06-2025
Estee Lauder (EL) gapped higher Monday on news of an analyst upgrade , allowing the stock to pull away from its 200-day moving average (MA), which was cleared last week. The breakout in EL is associated with new upturns in both the monthly stochastics and monthly MACD, which suggest long-term momentum has improved notably. The MACD signal is the first since August 2020 and suggests the April low was significant. The shift in long-term momentum followed a long-term counter-trend 'buy' signal from the DeMARK Indicators, which suggested that the downtrend was exhausted, with bullish implications for nine more months. The weekly MACD shows a series of higher lows and is approaching positive territory, reinforcing the idea that momentum behind the stock is meaningfully improved. The weekly cloud model can be used as a gauge of resistance going forward. The bottom boundary, near $80, is an initial hurdle that we think looks surmountable. The top boundary is near $111 as an intermediate-term upside objective. EL also has a tailwind from the consumer staples sector, which is deeply oversold from a short-term perspective relative to the S & P 500 Index (SPX) . The DeMARK Indicators support a short-term rebound in the ratio of the Consumer Staples Select Sector SPDR (XLP) to the SPX, meaning consumer staples are poised to outperform the broader market after having lagged since April. This relatively oversold condition is shared by other defensive sectors, like utilities and REITs. The ratio of XLP to the SPX also shows improved long-term momentum to suggest outperformance from consumer staples stocks could be lasting. Note that we highlighted EL as a promising technical setup recently in a Fairlead Strategies research report that can be accessed here . Please consider a free trial to access our top-down views and more stock ideas. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . 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