Altria (MO) thoughts

Discussion in 'Stocks' started by sludge, Jul 7, 2006.

  1. sludge


    Yesterday's trading saw a huge ~7% climb. Today the stock finish up a meager 0.05%.

    However, today's trading resulted in a weak hammer. Weak in that its an open candle with heavy volume.

    While the opportunity for reversal is not all that great, one still appears to exist.

  2. GTG


    I added a small amount to an existing position during a intra-day pull-back yesterday. I want more shares, but am hoping for more pullback before I buy anymore above my cost basis. I wouldn't expect MO to trade back down to where it traded prior to the big jump yesterday though. Although I think yesterday's ruling was widely expected, it was still a serious source of risk, which is now gone and therefore the company is fundamentally worth more because this risk has been removed.
  3. sludge


    Due to this breakout being nearly entirely fundamental, what are the odds of it retracing next week?
  4. GTG


    I really don't know. Obviously, the price of any stock can go anywhere no matter what the fundamentals say. I'm not saying that a spike based on "fundamentals" automatically can't be faded. The thing with stuff like court cases and FDA rulings, that they often fundamentally and dramatically change what a company is worth in a very short period and because they have a high degree of randomness the price before the event is less likely to already have the outcome "built into it" by traders expecting it to go one way or the other. Furthermore, after an event like that, you can't trust old support/resistance levels to help you get a a feel for where liquidity might exist. At the price it's trading right now there certainly seems to be a lot of supply. Maybe if the market in general sells off next week it will add enough supply to bring the stock in a little bit...enough to overcome demand from dip-buyers like me who want the stock for a long-term value play, and who want to get in ahead of a possible spin-off announcement, but who are worried it will run away before we get the chance? My guess is "yes it will", but I bought a little bit more for my long-term portfolio just in case I'm wrong and it doesn't pull back, but like I said I really don't know.
  5. Altria is a news driven stock that is worked by specialists all over the country. If you want to make money in this issue, you will need to get up to speed on the fundamentals first, then on the history of the company, and finally on the history of the legal challenges over the last 5 years or so.

    Once you have learned the basics, you will need to get a source for timely information as regards new and pending legal action and company news. That is where good speculators are making money today.

    The bond market is important for this issue so you should try to get a look at the bond outlook for the company through AM BEST, or one of the ratings organizations.

    In addition you going to need to study the intraday charts for earnings and other events including news releases, to get an idea of the size moves you will be playing for. If you are sharp you should eventually be able to determine where your edge lies and develop a strategy to trade MO on a specific time frame. If you work the stock now, you know that MO exhibits seasonal volatility changes but can be a very slow mover.

    As a fund manager, I owned (and traded) Philip Morris (now Altria or "Big MO") for more than a decade and still own a lot of their 30 year bonds in my private account (paying over 6.8% tax free by the way). So I am a very happy camper.

    Good luck,


    Sorry about the lung cancer thing of course. I take a little comfort in the fact that a lot of those Al-queda bastards are smokers. :D
  6. I've owned Mo on and off since it paid me 10% to own it in '99, sold of alot but still a dbl digit part of my book. wait till the low 70's to reload (I won't, kills my cost avg), but this thing will trade for a 3 handle at some point in the future.
  7. Yes of course, that could be said for quite a few stocks. In this case he next time MO sees either negative (court award) or positive news (judge throws out an award) that might happen.

    Recently a judge de-certified a class and threw out a previous award. Traders looking to study the data should take the trouble to find and read those news releases, making note of the timing. Then get your intraday charts for the period and look at how MO trades beginning about 30 days before the news release, and afterward. You'll start to see what I am talking about. While you certainly can pick up "3 handles" at one shot, I would be looking to pick off some consistent money piggybacking the moves up to and after these "events".

    I think that is about all I am willing to say about this.

    Good luck
  8. Back on December 15th when they threw out that other multi billion dollar lawsuit the stock jumped like it did yesterday. Eventually the stock went back into low 70s again.
  9. sludge


    Upon examining the intraday data I, I don't know what i was talking about. Price seems incredibly stable at its new level and the hammer formed for the day should be ignored.
  10. Yes, that is a very intelligent statement to make. Now lets go a little bit further down the road.

    If price seems stable to you on a specific time frame, and you want to project or find a place to enter a trade, you simply need to hunt up or down for a different time frame.

    If daily charts offer no entry, look at weekly and monthly and use that time frame, and vice versa.

    By the way, I am not saying I agree with you on this. Frankly from my perspective there is no long term stability to a stock's price, because each investor's definition of "value" varies from day to day.

    #10     Jul 8, 2006