This word, which also appears on the map of Middle-earth in LotR, is glossed as "blue" in The Etymologies, but Tolkien later rejected this meaning (as luin was already used in that sense). He then proposed several explanations for it, including the possible adaptation of a Dwarvish name into Sindarin, but he apparently never reached a definitive solution.
Noldorin
menel
noun. *the heavens
meneldor
masculine name. *Lord of the Heavens
a
conjunction. and
ar
conjunction. and
ell
noun. sky
elw
adjective. (pale) blue
lhûn
adjective. (unknown meaning)
lhûn
adjective. blue
telu
noun. dome, high roof
An element meaning “sky” in several names from The Etymologies of the 1930s: N. Elfaron “Sky-hunter” (Ety/SPAR) and N. Elthoron “Eagle of the Sky” (Ety/THOR). It was derived from the root ᴹ√ƷEL “sky” which had an Old Noldorin form: ON. elle (Ety/ƷEL). However, Tolkien said “In Noldorin and Telerin this is confused with EL star”, implying that the word was not used in modern language; an earlier but rejected version of this entry had archaic N. †ell, el “sky” (EtyAC/ƷEL).
Neo-Sindarin: Despite the above statements, ell is probably the best attested option for “sky” in Neo-Sindarin, and I would use it as such, since it is in fact distinct from S. êl “star”, a word that is itself archaic/poetic versus more common S. gil.