Cigarettes are just about the worst thing a human can put in their body. They cause cancer, make you smell bad, and have been banned in almost all establishments. Cigarette companies seem to always be exposed to lawsuits and face significant hurdles due to several reasons, including the social stigma associated with smoking and even the increased taxes that burden their consumers. And despite all this, many cigarette stocks are rallying to new all-time highs.
There are a host of reasons as to why this could be occurring, but regardless of why, it can't be denied that it is occurring sector wide. This usually points to institutional accumulation because it is occurring across several peers. Altria Group, Inc. (NYSE:MO) is one of the stocks in this group that has been performing well. It cleared a significant resistance level near $27 in early October and settled into a base-on-base consolidation. It traded sideways in a $1 range at a time when the market was extremely volatile, and the stock finally cleared the range a few sessions ago. MO is likely due for some profit taking, but overall, the price action is pointing at higher prices.

Philip Morris International Inc. (NYSE:PM) is another stock in this sector that is trading at all-time highs. PM also cleared a significant level in October as it broke above the $72 level. It experienced some volatility and ultimately chopped around for a few weeks, but was finally able to break free in late November. Much like MO, PM is much extended and likely due to pull back a little. However, the price action looks pretty clean and it appears that PM is back in an uptrend. (For related reading, see The Psychology Of Support And Resistance Zones.)

While also extended, Reynolds American Inc. (NYSE:RAI) is another cigarette stock that appears to be in a clear uptrend. RAI broke above a base in early October and settled into a flag-type consolidation. It cleared the flag in November and has been working higher since. It is likely due for some profit taking, and the $40 level would be an area to monitor for likely support. There is nothing but blue skies above, since RAI is also at all-time highs.

Lorillard, Inc. (NYSE:LO) is one stock in the group that is not hitting new all-time highs yet. It cleared its base in October like its peers, but it pulled back a little deeper and has yet to emerge from the secondary consolidation. However, it is starting to show some strength, and could make an attempt at its all-time highs soon, especially if the markets continue to show strength.

The Bottom Line
Regular readers know that I love when stocks in the same sector act in unison. This typically reveals either some sort of institutional activity, or at worst it confirms the story for the entire group rather than simply an individual catalyst. The cigarette stocks have been acting well for a few months, and are in long-term uptrends, as revealed by their weekly charts. I would not advocate smoking or chasing these stocks right now, they do appear that they are headed higher in the intermediate term. So while cigarettes are definitely bad for you, apparently cigarette stocks are not. (For related reading, see Point And Figure Charting Basics.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Charts courtesy of

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  2. Technical Indicators

    Using Pivot Points For Predictions

    Learn one of the most common methods of finding support and resistance levels.
  3. Chart Advisor

    Watch These Stocks for Breakouts

    These four stocks are moving within price patterns of various size, shape and duration, and are worth watching for a breakout
  4. Chart Advisor

    ChartAdvisor for November 20 2015

    Weekly technical summary of the major U.S. indexes.
  5. Chart Advisor

    Like Ranges? These Are Stocks to Consider

    Whether you want to trade the price fluctuations within a range, or await a breakout, here are four stocks for you.
  6. Chart Advisor

    Is This The Beginning Of A Downtrend In Home Builders?

    Falling lumber prices and weakness on the charts of home builders suggest that the next leg of the trend could be downward.
  7. Chart Advisor

    Low P/E Stocks Ready for a Turnaround?

    These stocks appear to be of great value based on P/E and Forward P/E.
  8. Chart Advisor

    Is Now the Time to Buy Lumber?

    News that Weyerhaeuser is planning to buy Plum Creek has put attention on the forest-products sector. Is now the time to buy?
  9. Forex Education

    9 Tricks Of The Successful Forex Trader

    These steps will make you a more disciplined, smarter and, ultimately, wealthier trader.
  10. Chart Advisor

    These Technology Stocks are Rolling Over

    These technology looked to have topped out, and could be heading lower.
  1. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  2. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  3. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  4. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  5. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  6. How do you know where on the oscillator you should make a purchase or sale?

    Common oscillator readings to consider making a buy or sale are below 20 or above 80, respectively. More aggressive investors ... Read Full Answer >>

You May Also Like

Trading Center