Estée Lauder Analysis: Buyer's Remorse Creates Opportunities - Estee Lauder Cos (NYSE:EL)

Shares of The Estée Lauder Companies Inc. EL are flat on Friday but the recent uptrend remains intact. If the stock reaches the $83.00 level there is a good chance it finds some resistance.

As you can see on the chart below, there was resistance around $83.00 in December. This is why it is our Stock of the Day.

In the market, there tends to be resistance at price levels that had been resistance previously. This is due to ‘buyer's remorse'.

There are investors and traders who bought shares around $83 in December who now regret their decision to do so because the price is lower. A number of them want to bail out of their positions, but they don't want to lose money.

As a result, they have held onto their shares. But if the stock gets back up to their buying price, they will place sell orders. If there is a large concentration of these orders, it can cause resistance to form at the level again.

The reason why there was resistance around $83 is also because of buyer remorse.

This level was support in September. Some of the traders and investors who purchased shares there were happy that they did so when the stock rallied soon after.

But when the support was broken in late October, many came to regret their decision to buy. Some decide to get out if they can do so at breakeven.

So, when the shares rallied back to $83 in December, these remorseful buyers placed sell orders. The large concentration of these orders caused resistance to form at the price that was support before.

Support and resistance levels form in markets due to investor and trader psychology. Buyer's remorse can turn what was support into resistance. It can also keep resistance intact for an extended amount of time.

If Estée Lauder makes it back to the important $83.00 level, the rally may pause or even end.

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