While most cigarette stocks had a successful 2014 on the charts, the sector behemoth by market capitalization — Philip Morris International (NYSE: PM), weighing in at $120 billion — headed mostly south. Through its April 1 low, it shed 18% from its June 2014 peak above $91. The good news is that PM reached long-term support from its 2013 low and, arguably, the bottom of a giant trading range originating in early 2012. The question for traders is whether this support will hold, and there are many reasons why I think it will. For… Read More
While most cigarette stocks had a successful 2014 on the charts, the sector behemoth by market capitalization — Philip Morris International (NYSE: PM), weighing in at $120 billion — headed mostly south. Through its April 1 low, it shed 18% from its June 2014 peak above $91. The good news is that PM reached long-term support from its 2013 low and, arguably, the bottom of a giant trading range originating in early 2012. The question for traders is whether this support will hold, and there are many reasons why I think it will. For starters, there is a positive condition in short-term momentum indicators such as the Relative Strength Index (RSI). While price set a lower low in April than it did in March, RSI set a higher low. This divergence between the two suggests that the price decline is weakening. Along that same argument, price action also set what I call a divergence within Bollinger Bands. The bands are based on volatility rather than a set percentage and offer an interesting way to look for pending trend changes. #-ad_banner-#​When prices moved below the lower band in a downtrend, it told us… Read More