If you're frustrated by Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), you're probably not the only one. The stock's been maddening to trade since October, stopping in its tracks the minute a trend just seems to start, and then starting a trend out of nowhere (both up and down). Yet, there's a good case to be made just to buy ARIA and stick with it, and ride out the hot and cold phases as they materialize. Indeed, if history repeats itself, now may be a great time to wade in.
For those not familiar with it, as the name would imply, Ariad Pharmaceuticals is a pharmaceutical name. Specifically, ARIA is the biotech company that makes Iclusig - the cancer drug that was taken off the shelves and saw its trials halted in October when it was feared it may cause blood clots. The stock tanked on the news, of course, falling more than 80% over the span of a couple of weeks ... most of it in one day.
As yours truly noted back on December 19th, however, sometimes the market overreacts, and in that overreaction lies opportunity. More directly, on December 19th, yours truly made his first of a few suggestions that Ariad Pharmaceuticals, Inc. was a buy-worthy stock.
Although it's continued to vex traders with its up and down action, when one takes a step back to look at the bigger picture, they find ARIA has actually gained 42%. It's just not taken a direct route to its current higher price of $7.90. It's getting there though, slowly but surely.
Fast forward to today. At first glance, the chart of Ariad Pharmaceuticals doesn't necessarily look all that compelling. The longer you look at ARIA though, the more a few things become clear: (1) The lows are getting higher, (2) the highs are getting higher. (3), and the really big 'up' days are unfurling on higher volume. Put it all together, and what you have is a stock worth taking a shot on.
But ARIA looks dead in the water right now? That's kind of the point. It looked dead in the water in mid-December, and shot up in late December. It looked dead in the water in mid-January, and shot up in late January. The early February lull doesn't look compelling on the surface, but if Ariad Pharmaceuticals simply continues to act the way it's been acting, it's going to surge within the next few days. In fact, with just a little more strength today - and a subsequent close above the ceiling at $7.85 - that could light the fuse.... again.
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Bottom line? Time to take a swing.
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