The search for income takes investors to diverse places, and tobacco stocks have been a favorite for many months. However, all trends eventually come to an end, and that seems to be the case for the rally in Reynolds American (NYSE: RAI). #-ad_banner-# Since its early July peak, the stock is down about 7%. This includes a rather sharp sell-off on July 26 following the cigarette maker’s disappointing second-quarter earnings report. The company missed both revenue and earnings estimates, and the post-earnings sell-off… Read More
The search for income takes investors to diverse places, and tobacco stocks have been a favorite for many months. However, all trends eventually come to an end, and that seems to be the case for the rally in Reynolds American (NYSE: RAI). #-ad_banner-# Since its early July peak, the stock is down about 7%. This includes a rather sharp sell-off on July 26 following the cigarette maker’s disappointing second-quarter earnings report. The company missed both revenue and earnings estimates, and the post-earnings sell-off resulted in a technical breakdown through a rather important trendline. This week, Cowen and Company reaffirmed its “outperform” rating on the stock, saying that weak guidance was already priced in, but the market is saying otherwise. RAI has been lagging the broader market since February and shows no signs on the charts that this condition will change. There are plenty of other technical warnings in place, including the non-confirmation of the July high by momentum and volume indicators, but let’s focus on the pure and simple trend break. Reynolds started its long-term bull market in 2009 when… Read More