22nd Century Group Inc (XXII)

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From SmallCap Network

Time to Wade Into 22nd Century Group (XXII)
It's scary to step into a stock that's still in the shade of a huge pullback, but 22nd Century Group Inc. (NYSEMKT:XXII) has put it all behind it.
By James E. Brumley
Mar 25, 2014 8:40:23 AM PDT

It feels a little bit like trying to catch a falling knife, but that's not quite what scooping up some 22nd Century Group Inc. (NYSEMKT:XXII) shares today is. The knife has already fallen. Now all you're doing is picking the knife up off the floor, which is infinitely safer than trying to grab in while in motion. Applying the analogy to XXII now simply means that this particular stock can't (realistically) fall any farther - it can only go up from here.

For those not familiar with it, XXII is a biotech stock. Specifically, 22nd Century Group makes smoking-cessation products, and also makes cigarettes that are less harmful than most cigarettes on the market (by lowering the tar content). It's a fairly small operation, with a market cap of only $176 million, and it's only been trading on the NYSE since March 11th. But, it's a compelling story and an interesting stock. And now, that stock has dropped a major hint that it's back in a bullish mode.

Almost needless to say, while the advent of being promoted to a senior exchange (from its OTC listing) was wildly bullish for XXII, the actual listing proved to be quite bearish. Over the course of the two months leading up to the upgrade, 22nd Century Group shares rallied 159%. Since the switch, 22nd Century Group shares have given almost all of that gain back, losing 56% of their value since March 11th, as of yesterday's close.

It would be easy to conclude the company was a disaster based on the pullback, and subsequently dismiss today's bullishness as mere volatility. That's not what's going on here, however. What really happened is, hype drove XXII shares to the moon leading up to what is undoubtedly good news - the upgrade to the NYSE - and once that happened, ANYTHING else was a relative letdown.

Truth be told, while moving from the OTC to the New York Stock Exchange is a big deal, it shouldn't have prompted the kind of move it did in the first place. It did though, and the pullback since then was the effect. It looks like, however - and this is the key - all the selling is now done, and 22nd Century Group can start to walk higher again, based on its valuation and opportunity rather than hype.

Two clues point to that end. One of them is the fact that we saw a huge spike in volume yesterday, on the heels of a huge drop from the stock. Big volume surges on big moves tend to mark an exhaustion of a trend... the proverbial last hurrah. XXII is no exception. The second bullish clue for 22nd Century Group Inc. is the shape and placement of today's bar. Today's high-to-low fits entirely inside yesterday's open and close, yet is pointed in the opposite direction [meaning the open was well above the close on Monday, but today, the close so far is well above the open]. This so-called "inside day" suggests a major change of heart from the market, which jives with the idea that all the would-be sellers were finally flushed out on Monday.

Complete article:

http://www.smallcapnetwork.com/Time-to-Wade-Into-22nd-Century-Group-XXII/s/via/10/article/view/p/mid/3/id/410/