Altria is setting up well for a fresh rally leg.  The stock’s pullback following its December spike high has held a key support area over the last two weeks.  This basing action near $69.00 is quite solid and could provide the footing needed for a powerful rebound.  We consider the stock a fairly low risk buy near current levels.  A close back below $68.00 would drop shares back below both the 200 and 50 day moving averages sending a clear warning sign in the process. 

Option activity is also pointing in the right direction.  Bob von Halle has the details:  Just over 4,000 March $72.5 calls at around $2.10 is most notable.  Also, about 1,300 Feb. $74.5 calls traded around the $0.70-$0.75 zone. 

At time of publication we are long MO is some managed accounts. 

Altria is scheduled to report its Q4 results on Feb. 1.