It would appear that the situation as far as Estee Lauder is concerned, given the options activity in the stock and speculation from multiple sources like the Evening Standard, is not if something is going on here, but who the bidder is.
The latest today in the London newspaper suggests it is Unilever. This may or may not be true, but what is true is that Unilever after wrongly rebuffing Kraft (the FT scoop article at the time really helped the process) needs to buy a poison pill like Estee Lauder to prevent it being taken over. The company is after all, the ultimate in sleeping giants, and the management have a cushy number.
As far as the charting picture of Estee Lauder is concerned, we are looking at a rampant technical picture, something which is said on the basis of the two as yet unfilled gaps to the upside since the beginning of May. Given that such gaps tend to come in threes, we would be looking for a buying climax over the next few weeks.
The initial target here is the red December resistance line projection, currently pointing to $112. After that we have a best case scenario target up to $130 – presumably one that could only be achieved near term with the help of some M&A. At this stage only back below the floor of the latest gap at $101.30 on an end of day close would even begin to be a red flag on the bull argument.
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