Philip Morris International Inc. (NYSE: PM) seems to be getting ready for a price bump in the short-term as per the latest charts. The company is a Swiss-American multinational cigarette and tobacco manufacturer, with products sold in over 180 countries. The most recognized and best-selling product of the company is Marlboro.
Bullish Move – Chart Indications
#1 Downtrend Channel: As you can see from the daily chart, the stock was forming a downtrend channel during the past several weeks. This is marked in pink color. The stock had typically taken support at the bottom of the channel before bouncing back. The stock currently looks poised for a breakout soon. Once a stock breaks out of a trend channel, it typically movies higher.
PM – Daily Chart
#2 Bullish Stoch: The %K line of the stochastic is above the %D line as seen in the daily chart. This is a possible bullish sign.
#3 Bullish RSI: The RSI is currently moving higher from oversold levels and is nearing 50. This indicates bullishness.
#4 Flag Pattern: As you can see from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in pink color. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case).
PM – Weekly Chart
#5 Above MA: The stock is currently trading above its longer-term moving average of 200-week SMA, indicating that the bulls are still in control.
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart. It is also moving higher from oversold levels. All these indicate bullishness.
#7 Oversold RSI: In the weekly chart, the RSI is currently starting to move up from oversold levels, signifying that an upmove may be imminent.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for PM is above the price of $92.20. This is marked as a green color dotted line in the daily chart.
TP: Our target prices are $98 and $102 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $88.60. Note that the stop loss is on a closing basis.
Our target potential upside is 6% to 11% in the next 3-6 months.
For a risk of $3.60, our first target reward is $5.80 and the second target reward is $9.80. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel with high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara Young
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