ZIOPHARM Oncology Has Proven All That It Needs to Prove (ZIOP)

Back on July 16th, I pointed out ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) was a budding superstar. Though I suggested waiting for the stock to cool off before stepping into it (and it did cool off, by the way), ZIOP has since walked its way above the key line in the sand that was acting like a ceiling then. Though there's still one more hurdle shares need to clear before being a "must-have" stock, the heavy lifting's been done.

First things first. ZIOP is - the name implies - a cancer-drug developer. Though almost all hopes were on Palifosfamide drug a few months ago only to have its failure pull the rug out from underneath shares, the market's starting to recall that ZIOPHARM Oncology still has six more drugs in its pipeline. The slow perk-up from the stock in the meantime is being driven by the value of that pipeline.

The real story here, however, is the chart.

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With my last look at ZIOP about three weeks ago, the horizontal ceiling at $2.96 was the key. The stock actually ended up edging above that line the next day (busting my expectation at the time), but fell back under $2.96 the day after that. That's not a bad thing though. In fact, that may have been the best thing that could have happened to ZIOPHARM Oncology. It bled off much of the overbought pressure. In the meantime, shares have quietly walked back above the $2.96 ceiling, and have since turned it into a floor. Better still, the 20-day moving average line (blue) has moved into place as a floor. Putting it all together, it says the buyers are not only serious, but methodical and calculated.

The next - and likely last - hurdle ZIOPHARM Oncology shares are facing is the 200-day moving average line (green) at $3.35. There's also a ceiling at $3.30, where ZIOP topped out a couple of times since my last look. But, if ZIOP can get over the 200-day line at $3.35, it will by default have cleared the newly-developed ceiling at $3.30.

Waiting until shares move above this resistance area is prudent, as it wipes away much of the risk that ZIOPHARM isn't really ready to break to new highs. That may be an unnecessary precaution, though. There's a lot of support and a lot of momentum already in place here. No risk, no reward.

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