Tobacco Stocks Are Just Too High

Tobacco stocks are on fire right now, no doubt as a tertiary play on potential marijuana legalization. It makes sense that companies that have mastered the mass production and sale of cigarettes might branch into this market. The question is, are tobacco stocks too high for their own good?

Check out the performance of Altria Group (MO), which has climbed more than 17% since its Feb. 5 close (arrow). At that point, it was oversold, according to its relative strength index indicator (RSI, light blue). Soon after, the moving-average convergence divergence indicator (MACD) gave a buy signal. Now, the relative strength indicator is overbought (red), and MACD is on the verge of a sell signal. These readings clash with the bullish consolidation pattern that is now forming on the stock, a small rectangle pattern. It's almost as if the technicals are disoriented, giving bullish and bearish signals simultaneously. Whoa, dude!...301 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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