Chart of the week: Good backdrop for a surprise rally | Summary and Q&A

TL;DR

BAT and other tobacco stocks are showing potential for a surprise rally despite negative sentiment in the industry.

Key Insights

• 👋 BAT has shown a beautiful five-wave wedge pattern, indicating a potential third wave up.
• 😮 Negative sentiment in the tobacco industry may serve as a good backdrop for a surprise rally in tobacco stocks.
• 🇵🇭 Similar patterns can be observed in stocks of other tobacco giants like Imperial Brands and Philip Morris, suggesting a possible rally in the industry as a whole.
• ❓ BAT's current momentum divergence indicates a more immediate bullish phase.
• 👋 Imperial Brands stock shows a potential rally in wave B after a collapse in wave C.
• 👋 Philip Morris stock has shown a breakout from a wedge pattern and a 1 2 3 4 5 wave move down, suggesting a potential rally in wave C of wave 2.
• 👀 The immediate picture looks quite bullish for tobacco stocks, with momentum divergences indicating potential rallies.

Transcript

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Questions & Answers

Q: What patterns are seen in the BAT stock analysis?

The BAT stock has shown a five-wave wedge pattern, suggesting a potential third wave up. This pattern indicates a bullish trend and potential for a rally.

Q: How has negative sentiment affected the tobacco industry?

Negative sentiment in the tobacco industry, caused by factors like the vaping health scare and failed merger talks, may actually serve as a good backdrop for a surprise rally in tobacco stocks.

Q: What is the comparison between BAT and Imperial Brands stock?

Both BAT and Imperial Brands stocks show similar patterns, with five-wave structures and potential for rallies. However, BAT's current momentum divergence indicates a more immediate bullish phase.

Q: Can a rally be expected in Philip Morris stock?

Yes, the analysis of Philip Morris stock also suggests a potential rally. The stock has shown a wedge pattern break out and a 1 2 3 4 5 wave move down, indicating a potential rally in the C wave of wave 2.

Summary & Key Takeaways

• BAT shares experienced a major low in January and have since shown a beautiful five-wave wedge pattern, indicating a potential third wave up.

• Despite recent knocks to the tobacco industry, such as the vaping health scare and failed merger talks, negative sentiment may serve as a good backdrop for a surprise rally.

• Similar patterns can be observed in stocks of other tobacco giants like Imperial Brands and Philip Morris, suggesting a possible rally in the industry as a whole.