In a perfect world, a stock would always - and accurately - reflect all the information known (and/or presumed) about a particular company. We don't live or trade in a perfect world though. In the real world, a stock's value is forever changing, caught between a fear and greed cycle that may or may not jive with a reasonable perception of the company's worth. That's not necessarily a bad thing, however, as you can use that ongoing volatility to your advantage. Enter Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA). Anybody who was mulling an position in ARIA needs to know that a pretty persistent technical pattern has developed, and though it may not look red hit right now, that's the perfect time to wade in.
If the name Ariad Pharmaceuticals rings a bell, it may be because yours truly has penned a couple of bullish thoughts on the stock following its October plunge. For those willing to listen to either the December 19th or the December 23rd optimism with ARIA, well, you're not actually up any. I'll tell you the same thing I said the last two times I looked at this stock, however - though it's been up and down and will continue to be up and down for the foreseeable future, when you take a step back and look at the bigger picture, Ariad is in an uptrend. The trick is just finding the right entry spot, and then finding the willingness to be patient.
I can't speak to where being patient will take us as for as Ariad Pharmaceuticals hitting a high point and translating into a profit, but I can speak to the timing of any entry... now's a great time to get into ARIA.
Yes, I know the stock's been dead money for nearly three weeks now, but it's been dead money before, and bolted higher out of nowhere. It's happened twice now, the second time in mid-December around the same point in time when Ariad Pharmaceuticals found a floor around a combination of moving average lines, and then used them as a springboard. If you look closely, you'll see that the sideways movement since mid-December has bought the 20-day moving average line some time to catch up with the stock. I suspect we'll get the same springboard action we got the last time the 20-day moving average line was brushed.
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As for where ARIA could end up, that's a great question. The stock could keep rising as long as the company continues to share encouraging news that undoes October's disastrous announcement. Realistically though, the pre-plunge price around $19.00 is about all I'd be interested in aiming for right now.
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