Considering I'm tired of saying it, there's a good chance you're tired of hearing it. Yet, if it needs to be said, then it needs to be said - Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is acting like it wants to go higher, and taking that hint in the recent past has paid off well, even if only temporarily.
Even if you don't know the company, it may ring a bell. Ariad Pharmaceuticals is the company that announced in October that its flagship cancer drug, Iclusig, may cause blood clots. The stock tanked when the drug was taken off shelves and its trials were suspended (in the United States anyway), even though it was a temporary measure to give regulators a chance to figure out exactly what was going on without risking anyone else's life. In fact, ARIA shares fell nearly 70% on the news.
As is all to often the case with a biotech stock, though, the market over-reacted. As it turns out, Iclusig can still be marketed in the United States - just with a longer warning label and more stringent oversight from administering doctors - and its trials can continue. It's also still being sold in Europe. In fact, there are whispers that Ariad Pharmaceuticals, Inc. is planning a new trial to begin later in this year that would pair Iclusig with an anti-clotting drug in order to negate the medicine's risk. Accordingly, ARIA has been slowly (and a little erratically) perking up as the sun has slowly risen again. In fact, it's the rising chart's history and current action that suggests it's worth yet-another swing now.
The chart below tells the tale. Over the course of more than three months of higher highs and higher lows, ARIA has wiggled and writhed its way back into an uptrend. And, it looks like we're gearing up for another pop. As I noted at the beginning of this week, this rally runs hot and cold, and the time to get in isn't when it's hot, but when it looks like there's a lull. See, the lulls don't last very long. If you can get in at the right time, you may just catch one of the big, high-volume surges Ariad Pharmaceuticals has been doling out. Indeed, if you look real closely at this week's action, although we've not seen explosive gains, this week's string of higher lows and higher highs says the bulls are testing the waters again. It's a sign they're gearing up for another round of buying, kind of like a burning fuse attached to a firecracker.
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Bottom line: There's more reward than risk here. Tide to wade in.
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