Bullish Divergence in Lorillard

There is a bullish divergence in place on the daily chart of cigarette manufacturer Lorillard (LO). Declining tobacco sales in Europe have been blamed for the recent weakness in the sector, but LO does business exclusively in the U.S. The company is set to report earnings Wednesday, one day after competitor Reynolds American (RAI); however, the stocks moved in opposite directions in the last reporting period after RAI reported better-than-expected earnings and LO missed estimates.

Lorillard (LO) -- Weekly Source: StockCharts.com View Chart » View in New Window »

The weekly chart shows the decline in LO from its July high, which has taken it back to a zone of support defined by the 2011 highs. Stochastics on this time frame is in an oversold condition, and Chaikin Money Flow has moved above its 21-period average and centerline. The technical condition of this chart reflects the potential for stability and consolidation....191 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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