Shares of Colgate-Palmolive are in breakout mode today following an upgrade from Sun Trust. The stock began today’s session with a powerful upside gap that lifted the stock past the September highs. CL has remained well bid since the open as it battles heavy resistance near the July peak. With a solid base underneath the stock is set up well for more upside.
Since late July CL has been trading in a narrow range while holding support near its upward sloping 200 day moving average. This sideways action followed a flurry of activity that began with a massive earnings inspired downside gap on July 21st. Three sessions later a rumored takeover by Unilever sparked a rally back up to the July peak. CL has been stuck inside its July 21 to July 26 range since then. A clear break past the top of this range could spark a fresh rally leg.
CL now has layers of support in place between $74.50 and $73.00. This key zone includes the September high as well as today’s news inspired breakout gap. If the stock can continue to firm up above this area a fresh rally leg will likely follow. On the downside a close back below $72.00 would violate the October low sending a clear warning sign.
Of note, CL is scheduled to report its third quarter results on October 27th.
At time of publication we are long CL in some managed accounts.