This Chart Pattern Says Star Scientific is Prepping a Monster-Sized Move (STSI)

The last time I looked at Star Scientific, Inc. (NASDAQ:STSI) was in mid-August, when I pointed out how the stock looked like it was finally beginning a breakout via a move above that nagging ceiling at $2.11. I didn't revisit it in the meantime because STSI peeled back under that key resistance level, and even back under its short-term moving lines. It wasn't a dramatic or painful pullback, but it was more than enough to put the breakout idea on the shelf until further notice.

Consider this that notice.

Though not yet back above the key horizontal ceiling at $2.11, STSI has wiggled its way back above the 20-day (blue) and 50-day (purple) moving average lines today after finding resistance at both of them for the better part of September and early October. That's a huge first step. We've also seen Star Scientific shares leave behind a shallow trail of higher lows since late September, hinting that this isn't just a little volatility.

To fully appreciate the potential upside of Star Scientific, Inc., however, you have to zoom out to a weekly chart where you can see the bigger picture.

As you can see, STSI is already in the midst of a significant recovery effort. It hit a low of $1.15 (again) in June, moved higher, and has at least been holding the line around $1.80 ever since. But, if the stock can move above the $2.11 mark now, it wouldn't just be a catalytic move - it could spark a monster-sized breakout.

See, the shape of the chart since early this year is - so far anyway - a cup and handle pattern. The bowl-shaped dip from February to the April/June low and back up to the $2.11 area in August forms the cup portion of the pattern, and the much shallower lull and rebound effort in the meantime has formed a handle for the cup. The key to the pattern becoming explosive is a move above the brim-line at $2.11. If Star Scientific, Inc. can just move above that line, it could catapult the stock, as is so often the case with this now-rarely-seen long-term chart pattern. It's definitely worth the wait, and putting on your watchlist.

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