4 Trade Ideas for Altria: Bonus Idea

• Posted by Greg Harmon
• on June 8th, 2020

Here is your Bonus Idea with links to the full Top Ten:

Altria, $MO, has been in a downtrend since topping in June 2017. A series of lower highs and lower lows over nearly 2 years brought it to the March low. The bounce from there printed a lower high in April. But then something different happened. It fell back in May but held at a higher low and reversed. It is now moving higher and at prior resistance. This could turn into a broad bottoming pattern, running sideways. Or a break of resistance could also lead to a trend reversal to the upside.

The RSI is strong in the bullish zone with the MACD rising and positive. The Bollinger Bands® are also pointing higher. There is resistance above at 42.25 and 44, right by the 61.8% retracement of the last leg down and the 200 day SMA, then 45 and 46.15 before 49 and 50.35 then 51.75. Over 51.75 would confirm the trend reversal. Support lower comes at 41.25 and 40.40 then 37.35 and 35.70. Short interest is low under 1%. The stock pays a dividend with an annualized rate of 8.02%. The stock begins to trade ex-dividend on June 12th. The company is expected to report earnings next on July 28th.

The June options chain shows the biggest open interest at the 45 and 32.50 strikes on the put side, but large size at every $2.50 increment. On the call side it is biggest at 45 then 40, but also has good size every $2.50. July options have biggest open interest at the 37.50 and 35 put strikes and double that at the 40 call strike. The September options are the first to cover the next earnings report. They have the biggest open interest from 35 to 40 on the put side, but the 40 call has as much open interest as those 3 strikes combined.

Altria, Ticker: $MO

Trade Idea 1: Buy the stock on a move over 42.25 with a stop at 41.15.

Trade Idea 2: Buy the stock on a move over 42.25 and add a June 41.50/40 Put Spread ($0.98) while selling the September 45 Call (93 cents).

Trade Idea 3: Buy the June 42/45 Call Spread (65 cents) and sell the June 39.50 Put (27 cents).

Trade Idea 4: Buy the September 35/42.50/45 Call Spread Risk Reversal (20 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which starting the month of June sees the equity markets showed renewed strength with significant moves higher.

Elsewhere look for Gold to continue its pullback while Crude Oil moves higher. The US Dollar Index continues to push to the downside while US Treasuries pullback as well. The Shanghai Composite looks to move higher in broad consolidation while Emerging Markets break to the upside.

The Volatility Index looks to continue to move lower putting a breeze at the back of the equity markets move to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe the QQQ is also strong printing a new all-time high with the SPY and the IWM drawing up as well. All are getting a bit overheated and may pause in the short term though. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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