Market Overview

Why The Slaughter In Estee Lauder?

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Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.

Estee Lauder Companies Inc (NYSE: EL) share were trading lower by $6 at $82.82 in Monday's session. Despite posting a Q4 EPS beat ($0.40 vs. $0.34 estimates), the Street is focusing on its sales miss ($2.52 billion vs. $2.57 billion). Also worrisome to investors is the lowered FY2016 GAAP EPS from $3.28 down to the $3.10-$3.17 range.

Since its Q3 beat on May 5, the issue has been in a well-defined trading range from $85.96 to $91.68. The lower end of the defined range was much better than the top of the range as the issue made multiple lows just above and below the $86 level and staged significant rallies.

However, in today's session the key support level has given way. After a lower open ($86.85 vs. Friday's close of $88.82), it managed a very brief pop to $88 before caving. Once the $86 level was breached, the issue went into a free-fall that may not have found a bottom.

So far, it has reached $82.71, but has not been able to distance itself very much from that low. The initial pop took the the issue to $83.50, but is drifting back to the lows for the day.

The current intra-day low coincides with its May 4 low ($82.67) which was one day before its surprising Q3 beat.

Today's route is taking place on heavier than average volume. So far, 7.1 million shares have changed hands compared to its 20-day average of 1.75 million.

Posted-In: premarkete outlookTechnicals Intraday Update Movers Trading Ideas


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