New Leg Higher for Colgate

Colgate-Palmolive (CL - commentary - Trade Now) is up over 3% today and is one of the top 10 NYSE dollar gainers. This may indicate the start of another surge in defensive names.

Volume on the advance is very brisk and will be well above average by the close. This surge has lifted the stock above an area of heavy resistance near $72.00 that has been in place since early June. The breakout today looks very similar to the beginning of the June rally and, if Colgate takes a similar path, will carry the stock up to last September's highs of $80.00 by the end of this month.

CL Daily (NYSE) Colgate-Palmolive Source: TradeStation

A pullback to support at $72.00 would be a buying opportunity. A close back below $70.00 would probably lead to a short-term shake out but would not destroy the up trend that has been in place since March. Volume will have to put up some impressive early June type levels for the rally to carry all the way to $80.00. If we see an expanding run in the defensive names, I would expect Colgate to be a leader and attract much better-than-average volume.

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Know what you own: Other personal product stocks include Procter & Gamble (PG - commentary - Trade Now), Unilever (UN - commentary - Trade Now), Kimberly-Clark (KMB - commentary - Trade Now), Avon (AVP - commentary - Trade Now), Estee Lauder (EL - commentary - Trade Now) and Alberto-Culver (ACV - commentary - Trade Now).

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At the time of publication, Morrow was long Colgate-Palmolive.