Altria Group, Inc. (NYSE: MO) seems to be poised for an upwards price reversal based on its latest charts. The company manufactures and sells smokeable and oral tobacco products in the United States. The company offers cigarettes primarily under the Marlboro brand; large cigars and pipe tobacco under the Black & Mild brand; moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands; oral nicotine pouches under the on! brand; and e-vapor products under the NJOY ACE brand.
Bullish Indications
#1 Uptrend Channel: As you can see from the daily chart, the stock has been trading within an uptrend channel during the past few months. This is marked in the daily chart in purple color. Currently, the stock is moving higher from the lower rail of the channel.
MO – Daily Chart
#2 Price above MA: The price is currently above the longer-term moving average of the 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 Positive OBV: The daily chart shows that the OBV indicator is currently rising. OBV rises when volume on up days outpaces volume on down days. A rising OBV typically reflects positive volume pressure that can lead to higher prices.
#4 Oversold RSI: The daily chart shows that the RSI is currently starting to move higher after reaching oversold levels. This is typically a sign of a price reversal to the upside.
#5 Above Support Area: As you can see from the weekly chart, the stock has currently above a gap support. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are still in control.
MO – Weekly Chart
#6 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
#4 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below the –DI line. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of MO above the price of around $54. Alternatively, you can purchase the shares of MO if it corrects to the price of around $50.
TP: Our target prices are $58 and $62 in the next 3-6 months.
SL: To limit risk, place stop-loss at $51.50 (for entry near $54) and $46.00 (for entry near $50). Note that the stop-loss is on a closing basis.
Our target potential upside is 7% to 24% in the next 3 to 6 months.
- Entry near $54: For a risk of $2,50, our target rewards are $4.00 and $8.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $50: For a risk of $4.00, our target rewards are $8.00 and $12.00. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the trend channel with a 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
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