Wednesday, November 10, 2010

MO Watch

The tobacco company Altria Group Inc. (MO) moved to bear phase on all of my primary signallers late Tuesday, and followed with a sharp price drop today.

ppspsarmacd obvh-a trend ma20ma50ma200
MO $25.10

The drop ended a 25-day bull phase that produced a net price gain of 8.1%.

MO is a growth stock by some measures. The return on equity is a stunning 83.35%. However, the debt load is high, with a debt to equity ratio of 2.37.

The stock is now trading 3.3% below Tuesday's open.

On the daily Persons' chart, the drop has carried the price well below the first lower pivot. The next lower Person's target is $23.87.

Person's Table
ppspps openupper pivotlower pivot
MO $25.10 $25.95 nov9 $26.84 +6.9% $23.87 -4.9%

The price hit an all-time high two days before the signal, of $26.22. The rise kicked off with a swing low of on Oct. 1.

Reversal Levels
  • $26.22, +4.5% (all-time high)
  • $25.10 --- You are here.
  • $23.66, -5.7% (swing low)
  • $20.82, -17.1% (20-day moving average)

Bottom line: If I had a bull position on MO in my accounts, I would exit it. I would not, however, move to a bear position, because of the hight return on equity. Despite the debt, I consider MO to be growth stock, and I don't do bear plays on growth stocks.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

  • h-a trend - Heikin-Ashi trend.
  • obv - On-Balance Volume.
  • pps - Person's Proprietary Signal.
  • psar - Parabolic Stop and Reverse
  • ma20 - 20-day moving average
  • ma50 - 50-day moving average
  • ma200 - 200-day moving average
  • macd - Moving Average Convergence-Divergence

About the glance: The colors indicate the state of each signal.
  • Signal Section:
    • pps, psar, macd: green for bull mode, red for bear.
  • Confirmation Section:
    • obv: green for uptrending, red for downtrending.
    • h-a trend: green for uptrending, red for downtrending.
  • Environment Section:
    • ma20, ma50, ma200: green for above the average, red for below the average.

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