Makeup Can’t Help a Dog

• Posted by Greg Harmon
• on June 8th, 2011

Cosmetics and Salons are a big business. To a guy though they are all the same. No brand recognition. One is the same as the next. We have no ability to distinguish quality outside of how it looks applied on those that we admire, love and tweet pictures to of ourselves in gray underwear. But there is a difference, and it shows up in the charts of three major stocks Ulta Salon Cosmetics & Fragrance (ticker: $ULTA), Estee Lauder (ticker: $EL) and Avon Products (ticker: $AVP). Let’s take a look.

AVP

AVP consolidated from November through to March before falling lower. From a low in March it then trended higher into its earnings release May 3rd. Since mid May it has been trending lower and is now at a previous support level and just below the consolidation area. As it get s there it has a falling Relative Strength Index (RSI) and a Moving Average Convergence Divergence (MACD) indicator that is growing more negative. Even the Bollinger bands are expanding to allow for the move to continue. It looks lower unless it can build a foundation at the 27.50 level. Under 27.50 it has support at 26.00 and then 25.60.

EL

EL has been in an uptrend since September with the price action from February on looking like a stair step function. Last week though it broke through the 50 day Simple Moving Average (SMA) after falling from a triple top at 103. The RSI also dropped to its lowest level since September, and into bearish territory. The MACD is also growing more negative. This needs to put on some make up to cover the ugliness. Support lower comes at 92.50 and then 90 and 87.50 before the gap at 81.26.

ULTA

ULTA had been in a rising channel for 9 months before falling below it last week. It had also been building a descending triangle, potentially indicating a top. But after reporting earnings Tuesday it popped right back in and up to resistance near 57.15. It is not out of danger of falling yet but is the best looking of the three. If it can get through 57.15 then the break of the triangle would suggest a move to 66 higher. If there is one stock that has applied its make up better tan the others this is it.

(As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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