Altria's (MO) - Get Report 1% gain on Monday may have been relatively small, but it was significant. The rally off Friday's low has now extended to 3.35% and has driven the stock past its September peak. Altria stock now has another layer of solid support underneath and is setting up for a retest of its 2016 peak set back in July.
Altria's steep post-election selloff pushed the stock back below its 200-day moving average. During this two-day selling wave, Altria fell more than 6.5% before reaching what now can be considered major support near the October low. After regaining its footing just below $61, Altria quickly rebounded, leaving behind a significant monthly double bottom.
Altria dipped a bit as November came to a close, but since the Dec.2 open, the stock has been in a steady uptrend. On Dec. 9, the stock broke through a key overhead trendline that links the August, September, October and November highs. It continued higher before pulling back late last week and retesting support near $65.55.
After Monday's impressive action, Altria is on course for a run-up to the $70 area. As a new rally leg develops, Altria bulls should consider the stock a buy on weakness. A very solid support zone is in place between $67.30 and $66.30.
On the downside, a close back below $65 would take out last week's low, sending a clear warning sign in the process.
This article is commentary by an independent contributor. At the time of publication, the author was long MO.