Member @liftholic inquired about the outlook for MO (Altria Group) in the trading room. After reviewing the charts, I immediately noticed quite a bit of significant technical levels & developments worth noting so I figured that I’d share my thoughts on the front page as this high-yielding dividend stock is now on watch as a swing trade as well as a growth & income trade idea.
MO weekly April 20th
Let’s start with the bigger picture by taking a look at the 10-year weekly chart above. Lots of moving parts & significant developments, all of which are noted on the chart below. Essentially, it appears that the bull market that lifted Altria 440% off its late 2008 bear market lows, the longest bull market in that stock, by a wide margin, going back decades. All good things must come to an end & whether or not my long-term outlook, which has MO continuing lower over the next year+, pans out, I do believe that the stock could be setting up for a multi-week to multi-month bear market rally.
MO 4-yr, 2-day April 20th
Zooming down to the 4-year, 2-day (bi-daily candlesticks) chart above, it appears that if MO can rally off the 56.30ish support level, even if it makes a brief dip below first, the potential bullish divergences will be confirmed with MO likely rallying to the 60.90 area for a gain of 8% + any dividends paid (the stock currently has an attractive forward dividend yield of 4.4%).
MO daily April 20th
The final chart above is a 2-year daily chart showing a likely scenario of a relatively brief consolidation & possibly one more slight undercut below the 56.30ish support before rallying, which would turn the momentum indicators back up & confirm the potential bullish divergence that has been building since August.
I plan to watch the stock over the next week or so to see if this support appears likely to hold & also to confirm any long entry on MO with a bullish or at least a neutral outlook on the broad market. As a component of the S&P 500 Index, should the broad market take another sharp leg down in the coming weeks, that would provide a headwind to Altria as well as most stocks within the $SPX.