EL enters Death Cross for the first time since March 6, 2019
Estee Lauder Companies Inc. (EL) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, EL finished Thursday at 172.98 gaining $5.22 (3.11%) on low volume, significantly underperforming the S&P 500 (6.24%). Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (EL as at Mar 26, 2020):
Thursday's trading range has been $10.31 (6.08%), that's slightly below the last trading month's daily average range of $12.30. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for EL.
One bullish candlestick pattern matches today's price action, the Bullish Spinning Top.
The stock managed to close above the 20-day moving average at 170.85 for the first time since February 21st. Unable to break through the key technical resistance level at 174.93 (R1), the share closed below it after spiking up to 176.48 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. When prices bounced off a significant resistance level the last time on Tuesday, EL actually gained 6.29% on the following trading day. After having been unable to move above 174.82 in the previous session, the market ran into sellers again around the same price level today, missing to move higher than 176.48.
Though Estee Lauder is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish. With its 50-day moving average crossing below its 200-day moving average, EL has entered a so-called "Death Cross" for the first time since March 6, 2019. Showing increasing downward momentum in the short and medium-term the "Death Cross" is known to indicate a potential bear market on the horizon.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Death Cross" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Estee Lauder. Out of 8 times, EL closed higher 62.50% of the time on the next trading day after the market condition occurred.