The Good the Bad and the Ugly…Maybe a Little Makeup Could Help

• Posted by Greg Harmon
• on January 25th, 2011

You hear it often, stocks in the same sector and the same business trade together. If you like one company then also look at the rest. But that does not always hold. Three beauty companies have been in a cat fight lately in terms of price action for the top spot, Avon Products (Ticker: AVP), Ulta Salon Cosmetics (Ticker: ULTA) and Estee Lauder (Ticker: EL).  They are the Good the Bad and the Ugly.

The Good

The chart above for AVP is the best of the lot. After a sell off to begin the year, it found support at the 28.50 level that has been previous support and is now moving higher towards the 100 day Simple Moving Average (SMA) at 30.29. The Relative Strength Index (RSI) is rising and pointing up, and the Moving Average Convergence Divergence (MACD) indicator is improving and printed a bullish cross. If it can break the 100 day SMA then the next resistance level is at 31.50 before the long term resistance support area between 32.80 and 33.

The Bad

The chart for ULTA is not quite as good. It is still looking to confirm that support will hold just above 35.40. The RSI is leveling, but the MACD is still growing more negative. This stock also has historical price support lower at 34 and then 33. If you chose to enter long at current levels then a tight stop is warranted at 35, above the gap to the lower support areas. I would wait.

The Ugly

Finally the chart for EL fell off of a cliff Tuesday printing a very bearish long red candle. This came after a bearish cross on the MACD on Monday. The RSI shot straight down and is still pointing lower. The first support can be found at 80 and then the 50 day SMA below at 78.77. This pig has more downside to come, maybe it can get some lipstick from AVP?

Trade’m well!

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