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Fan Yang

Anticipating a 10% Bounce in Phillip Morris (PM)

Philip Morris Int'l $PM has been sliding since almost tagging $124 back in June 2017. After falling to $76.20, I think we are going to see a rebound. However, I wouldn't call a bullish reversal just yet. I think the trend has turned bearish and we will have to anticipate resistance around $87.

PM Daily Chart

(click to enlarge)

Bullish Divergence:
- We can see that price made a lower low in June relative to May. But the RSI made a higher low. This is a bullish divergence and suggests the bearish momentum is cooling off, which could be a sign of an impending bullish attempt.
- Usually, this bullish divergence should only be part of the clue for assessment.
- Looking at the weekly chart, we can see another couple of clues.
1) $75 is a critical support. 
2) The weekly RSI is in the oversold area (under 30).
- These are clues that the market should at least get a bit choppy here just about $75. 
- We can probably expect a bullish attempt, even if it is within the context of a larger downtrend.
- The bullish outlook should be conservative for now, and the $87-$88 area is a previous support pivot that should be monitored as resistance.
- We should also monitor the RSI as it approaches 60, at which point we should anticipate selling pressure.
- The most aggressive bullish outlook should be limited to the critical pivot around $95-$96. 

PM Weekly Chart

(click to enlarge)

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