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Investors abandon Ulta Beauty at the extended session on Thursday.
Stocks dropped 22% after the hours that followed the loss of revenue and earnings. Same store sales were also below expectations.
Bill Baruch, president of Blue Line futures, said the title could see more trouble coming until it finds a bottom.
"It's a break below the 200-day moving average and a bullish trend violation," Baruch told CNBC's "Trading Nation" in an email after generating a profit. "Support does not come before $ 250 to $ 260."
Ulta was trading at $ 265.30 on Thursday night. It would have to fall further by 6% to reach the lower end of this band.
Baruch is optimistic about a different beauty action: Estee Lauder. This name has jumped more than 56% this year, making it the most successful beauty title. However, Baruch said in "Trading Nation" earlier in the day that despite trading well above its moving average over 50 and 200 days, the Estee Lauder rally is only stable " as long as it stays above $ 195 to $ 197. "
Estee Lauder is still 3% of the break below the upper limit of this range.
Gina Sanchez, CEO of Chantico Global, says that despite mounting pressure on the large retail space, Ulta is still best positioned to weather the storm from a fundamental perspective.
"If you look at how Ulta has switched from one online offer to another, the latest annual report suggests that this will continue to drive growth," she said Thursday. "So, I think in the retail sector, they look fantastic because beauty is a good commodity in the recession."
Sanchez, however, advises investors to closely monitor the valuation of Ulta, which has become a little too noble.
"She exchanges at 24 times the reference value of the price / earnings ratio compared to her 9-fold PE," she explained. "I think that's one of the reasons he's fighting right now, so we have to see how this assessment element goes."
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