Stock of the day: Philip Morris

American Indices are experiencing another bearish correction. We are seeing decline in the price for the third consecutive day, yesterday’s drop being a quite impressive one.

Sellers should hold their horses though. This has happened one too many times; a few days of a decline followed by a sharp V-shaped bullish reversal. Too many doom worshipers were fooled with that, too many times.

Today, we will focus on Philip Morris as the company’s stock is in a very important place right now. It’s definitely in a strong up trend, as the price is still above the long-term up trendline (red). What is interesting here is that the price is currently testing an important mid-term horizontal support at 100.8 USD (orange). That’s where trading ended yesterday and I cannot wait to see today’s opening.

This is a nice place for a bounce, the price staying above the orange line will be a good buy signal. On the other hand, the price dropping below, will be an invitation to go short as that would create the false breakout patten (blue), which in combination with a declining market can be lethal.