22nd Century Group Moves Past Another Hurdle (XXII)
22nd Century Group Inc. (NYSEMKT:XXII) is moving just as expected, and there's still time to hop on board.
By James E. Brumley
Jun 9, 2014 8:30:43 AM PDT
While it's only been a little over a week since yours truly named 22nd Century Group Inc. (NYSEMKT:XXII) as one of the market's best-looking breakout opportunities, circumstances dictate the message rather than the other way around. That's the indirect way of saying XXII has continued on ahead, behaving as expected, punching through its key ceilings and solidifying the bullishness it was hinting at late last month.
The day was May 29th. That's when XXII was in its third day of rally effort after pushing up and off a near-term support level - the lower edge of an expanding wedge pattern. As it turns out, the bulls would need to take a pause there for a bit. 22nd Century Group shares hit a cap of 3.28 there for the next few days, in line with the peak from mid-May, and started to act as if the rally effort was already out of gas. It wasn't. Thanks to today's 12% surge, XXII has picked up where it left off, punching through the ceiling at $3.28 and rekindling the uptrend.
It's also worth noting today's move has put some distance between the stock and the last of its key moving average lines.... the 100-day moving average line (gray) at $3.10. With the rally effort in full gear again after a couple of months' worth of consolidation, 22nd Century Group could remain in this uptrend for quite some time; a return to March's peak of more than $6.00 isn't out of the question now that the ball is rolling.
For those not familiar with it, 22nd Century Group Inc. is the developer of low-nicotine tobacco and other smoking-cessation products. The company isn't doing a great deal of meaningful business yet, but that's about to change. It inked a deal a couple of weeks ago to start producing nicotine-free cigarettes for the European market. Meanwhile, U.S. regulators continue to test the company's products. It looks like much of the work the company has done over the past six months could start to get traction over the course of the next six months, with real revenue ramping up early next year.
Veteran traders know how this works though... stocks tend to trade anywhere from six months to two years in advance of a company's results. That's why XXII shares went hog-wild between December and March - traders knew products were poised to be unveiled. They just got ahead of themselves. Now, with a little more clarity on the revenue front and with a little less indiscriminate, rampant buying, the new/rebudding uptrend looks like it could last a while as long as it moves at a steady pace.
