There could be an incredible bounce on Star Scientific Inc. (NASDAQ: CIGX) as it was recently cut in half by a negative court ruling, currently trading down almost 50% from yesterday’s close of $3! CIGX is a maker of smokeless tobacco products, tumbled the most in two years after losing a bid for a new trial in its patent-infringement case against Reynolds American Inc. (NASDAQ:RAI)

The U.S. Court of Appeals for the Federal Circuit in Washington today said there was substantial evidence to support a lower court’s finding that Reynolds didn’t infringe Star’s patents for reducing carcinogens in cigarettes. The Federal Circuit said the trial judge should have reversed a jury’s findings that the patents were invalid. (Read more)

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Technical Indicators:

• Watch for CIGX to hold its low of $1.50 and finally its yearly low of $1.43.
• The MACD and RSI are both showing dramatic signs of being oversold, so there could be a nice bounce on CIGX soon.

The Bottom Line

CIGX could have an incredible bounce once more investors start to see some price stability and more buying pressure enters the stock. CIGX was counting on the patent to help supplement rising operating costs, but it is still obvious that there is a growing market for health conscious individuals across the world. You might want to take a long-term position in CIGX at these levels!

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Good Luck,

Ian Decker

Disclosure: No Position

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