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Allan Harris
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After practicing law for way too long, I moved my family to the beach (Kiawah Island, South Carolina) to trade stocks for a living. After making and blowing a fortune in the technology bubble of the 1990's (and then again in 2006-08), I discovered the art and science of trend following. In... More
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The Constitution, The Declaration of Independence, and the Articles of Confederation
  • CIGX And Confirmatory Analysis 1 comment
    Jul 3, 2012 9:47 AM

    Back in the 1990's I co-authored a book titled Confirmatory Analysis. It described a way to analyze stocks by combining stellar fundamentals and outstanding technicals to filter stocks with the best potential to appreciate in price. Although I have since some to the view that technical's, i.e. trend following, is the only criteria needed to successfully trade and invest in stocks, I still come across stocks that look exceptionally promising in both fundamentals and technicals.

    CIGX (Star Scientific) probably has the most promising fundamentals of any stock I have seen in the past decade. So as to not link only the positive Seeking Alpha articles on CIGX (although that's all I can find), here is the link to all articles and posts on Star Scientific found in Seeking Alpha.

    As for the technical's, simply superb. Price is well above its algorithm-defined trendline, it is breaking out above it's prior highs, the Auto Trend Regression channel is steeply up and the Elliott Wave pattern shows CIGX in the beginning stages of a Wave 3 UP. All of the ingredients are in place for a run that the Elliott Wave count below is suggesting will exceed $9.00 in the months ahead.

    (click to enlarge)

    Disclosure: I am long CIGX.

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    I agree with you that it is rare for a stock to have the fundamentals and technicals aligned as well as we have with Star Scientific in July of 2012. I have studied the philosophies of numerous financial writers from Bill O'Neil to Peter Lynch, and I am watching Star Scientific meet every criteria needed for a stock to be a tenbagger. For example, Star is currently being accumlated (look at the price and volume) by major institutional investors. Bill O'Neil calls this sponsorship.

    I have never studied Elliott Wave patterns, so I can't speak to the $9 target that Elliott Wave analysis predicts. For future price estimates I like to use Point and Figure charts. After 10+ years of study of P&F charts, I have learned that for high tech, high beta stocks that are breaking out, it is best to use a 4 Box reversal for the P&F chart. Using the 4 Box reversal, we have a Ascending Triple Top Breakout on June 15th with a Bullish Price Objective of $10.25. There is always major resistance at round numbers...so I anticipate Star Scientific will run to $10.00 after it breaks through the resistance at the 5-year high ($5.89). I think that could happen a lot faster than many people realize.

    http://bit.ly/NxWPpj[P][D][F1!4!!!2!20]&am...

    It could be tough to break through the $10 price barrier until earnings catch up with the stock price. Of course, that could happen overnight on a settlement with big tobacco at 5-10 cents per pack of cigarettes. Star's earnings on that news would jump to over $3/share by my calculation...and the stock could go ballistic. For my analysis of where things could be headed in the tobacco litigation, here is a post that may be of interest.

    http://bit.ly/NxWO4I

    Also, FWIW, I expect we will start hearing interim results on the various clinical trials on Anatabloc any day now. For why I think that, here is a post worth reading.

    http://bit.ly/NlwmgO


    JMHO,

    NJ
    4 Jul 2012, 09:28 AM Reply Like
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