Catching a Falling Knife Trade
Technical:
A classic 5 wave pattern down, a large head and shoulders pattern confirmed the massive drop. Price is now stabilizing, we could be in the final stages of Wave 5.
Each wave down was a short trade at the 0.5 and 0.618 Fib retracement. It's been a brutal 76% crash since the top.
I would like to see a change in market structure as this has been a falling knife and whilst this is going sideways the buying pressure needs to step in. I am therefore watching the earnings and charts closely on this before taking a long position.
Fundamentals:
Strong Brand Portfolio and Global Presence: Estee Lauder owns a diversified portfolio of premium brands, including MAC, Clinique, and La Mer, which have strong recognition and customer loyalty globally. Its presence in high-growth regions, like Asia-Pacific, gives it a robust international foothold to leverage in emerging markets and adapt to shifting demographics and beauty trends.
Focus on Digital Transformation: The company has been investing in digital channels, e-commerce, and data-driven personalization, allowing it to cater directly to consumers with personalized products and marketing strategies. This shift has enabled them to capture a growing share of online beauty sales, which is expected to continue expanding post-pandemic.
Exposure to Slowing Luxury Demand: As a luxury brand, Estee Lauder is vulnerable to economic downturns, particularly in the U.S. and Europe. If global economies slow further, discretionary spending on high-end cosmetics could drop, affecting sales and profitability in key markets.
Supply Chain and Cost Pressures: Rising costs for raw materials and logistics have impacted Estee Lauder’s operating margins, and the ongoing cost inflation could continue to affect profit margins. Persistent supply chain disruptions also pose risks to product availability and lead times, potentially impacting customer satisfaction and revenue growth.
Conclusion:
This mix of positives and challenges could position Estee Lauder well for long-term growth but requires navigating through some short-term pressures.
A classic 5 wave pattern down, a large head and shoulders pattern confirmed the massive drop. Price is now stabilizing, we could be in the final stages of Wave 5.
Each wave down was a short trade at the 0.5 and 0.618 Fib retracement. It's been a brutal 76% crash since the top.
I would like to see a change in market structure as this has been a falling knife and whilst this is going sideways the buying pressure needs to step in. I am therefore watching the earnings and charts closely on this before taking a long position.
Fundamentals:
Strong Brand Portfolio and Global Presence: Estee Lauder owns a diversified portfolio of premium brands, including MAC, Clinique, and La Mer, which have strong recognition and customer loyalty globally. Its presence in high-growth regions, like Asia-Pacific, gives it a robust international foothold to leverage in emerging markets and adapt to shifting demographics and beauty trends.
Focus on Digital Transformation: The company has been investing in digital channels, e-commerce, and data-driven personalization, allowing it to cater directly to consumers with personalized products and marketing strategies. This shift has enabled them to capture a growing share of online beauty sales, which is expected to continue expanding post-pandemic.
Exposure to Slowing Luxury Demand: As a luxury brand, Estee Lauder is vulnerable to economic downturns, particularly in the U.S. and Europe. If global economies slow further, discretionary spending on high-end cosmetics could drop, affecting sales and profitability in key markets.
Supply Chain and Cost Pressures: Rising costs for raw materials and logistics have impacted Estee Lauder’s operating margins, and the ongoing cost inflation could continue to affect profit margins. Persistent supply chain disruptions also pose risks to product availability and lead times, potentially impacting customer satisfaction and revenue growth.
Conclusion:
This mix of positives and challenges could position Estee Lauder well for long-term growth but requires navigating through some short-term pressures.
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