Jeff Williams, lead trader at PennyPro.com, says that 22nd Century Group Inc. (XXII), a marijuana stock, has gotten over the ill effects of a fall offering and is now looking at the potential to move up 20 percent. XXII has consolidated and gone sideways, and Williams said that when he saw the stock break above a double-top resistance level at $2.30 on Monday, it was time to act. Williams noted that the Relative Strength Index (RSI) and moving-average convergence/divergence (MACD) have been showing a positive divergence, trending higher while the stock was moving sideways, which he typically finds as a precursor to a move up. Williams is targeting $2.60, and noted that resistance past that would be at $2.85, which he considers possible; his stop-loss on the trade — which he entered on Monday — would be a breakthrough back below the 20-day moving average of roughly $2.20.
Williams noted that the news, the price movement and trends among smaller marijuana — or “plant biotechnology” — stocks should give XXII a trend that could help push it forward too; he noted that the stock is worth buying here so long as shares are under $2.40.
Jeff Williams is the lead trader of PennyPro.com. He is a short-term trader of stocks under $5 a share. At the time this interview was recorded on Nov. 20, he had just purchased 4,000 shares in XXII and was planning to hold/trade them as described in this conversation. The Raging Bull podcast features experts from the site talking with Raging Bull editor Chuck Jaffe on his show, “Money Life with Chuck Jaffe.” You can learn more about Chuck’s daily hour of market and personal-finance chat at MoneyLifeShow.com; you can subscribe to the Raging Bull podcast via iTunes and other podcast providers.