Smoke Signals

• Posted by Greg Harmon
• on October 24th, 2011

Lorillard, $LO, started a slew of tobacco company stock earnings reports Monday morning. Each of the next three days you will see reports from Reynolds American, $RAI, British American Tobacco, $BTI and Altria, $MO. Lorillard got hammered, down 5% in the premarket, but then fully recovered before closing down only 0.58%. The $LO chart was bullish coming into the report and it ending up holding support above the top of a breakout channel at 112. With that strength as a backdrop lets look at the other 3 about to report this week. Will they all trade together?

Reynolds American, $RAI

Reynolds American, $RAI, reports before the open Tuesday. As it trots into earnings it is flying a bull flag. The Relative Strength Index (RSI) is bullish and has remained that way since jumping off of the bottom in early August. The Moving Average Convergence Divergence (MACD) indicator has been flat for a couple of days, without any real guidance. A move above 40 would trigger a target n a Measured Move (MM) to 42.60. Failure and a move below the flag support at 38.

British American Tobacco, $BTI

British American Tobacco, $BTI is braking out of an extremely rare and bullish Diamond Continuation pattern ahead of its report on Wednesday. The RSI is puffing higher and the MACD is growing. A move above the previous high at 94 would trigger a target from the pattern at 102. This would be negated by a move back below 89.

Altria, $MO

Altria, $MO, is also in a bull flag ahead of its report on Thursday morning. The RSI is bullish but slowly fading toward the mid line and the MACD is crossed negative as it approaches the mid line of the Bollinger bands. A move under 27.25 has support at 26.90 and a break of the flag higher over 27.55 resistance at 28 and then a MM to 29.50.

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