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Ariad Pharmaceuticals (ARIA) Plummets on Signs it's Overbought

By  +Follow January 27, 2014 8:25AM
Tickers Mentioned:

The buyout rumor giveth, the buyout rumor taketh away.

Shares in Ariad Pharmaceuticals (ARIA) dropped again on Monday, giving up much of the 11 percent gain from Friday. Ariad actually gapped up almost five percent to start the day before starting to plunge about 15 minutes after the markets opened, ultimately shifting to a loss of about 9 percent by early afternoon.

Rumored Buyout May Not Materialize

Potentially driving the loss was an article by TheStreet’s Adam Feuerstein that cited an anonymous institutional investor who was shorting the stock as saying that Friday’s buyout rumors were unfounded. "A takeover of Ariad by any Big Pharma would be career suicide for the business development guy proposing such a deal," this investor told Feuerstein. The investor also cited the potential for competition from Novartis’ (NVS) myeloid leukemia treatment that fills a similar role to Ariad’s Iclusig.

Technical Signs Indicate ARIA Overbought

However, the more-likely source of the plunge can be found in technical factors that would seem to indicate the stock was overbought. Since its dramatic October plunge after the FDA pulled Iclusig on blood clotting concerns, and several months of back-and-forth swings on very heavy volume, Ariad has been staging a strong rally that has placed it among the best performers in its industry of the last two months.

Ariad’s heavy daily volume would indicate that this small-cap company has become something of a battleground stock, and clearly one most traders are watching. And, as such, the more likely explanation for today’s sell-off can be seen in the stock’s relative strength index (RSI) crossing 70 this morning, a technical sign that traditionally indicates a stock is overbought.

The stock also flirted with an RSI of 70 twice in late December and earlier this month, with a sell-off following soon after on both occasions. Volume today was once again very high, clearing 70 million shares by 2:30pm. With a short float of close to 25 percent, it’s clear that Ariad remains a focal point for bullish and bearish traders alike.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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Results for ARIA
Leo Kolivakis
24 Nov 14 13:50:58
Nice volume and breakout on Ariad Pharmaceuticals and Xoma Corp. $ARIA $XOMA
Jeffrey Blake
24 Nov 14 13:33:07
$ARIA Iclusig cleared in Australia (ARIA) http://t.co/8Jh6Tu6oN4
Jonie Gallegos
24 Nov 14 13:22:50
#Stock Watchlist you should be looking at $MET $OFC $ARIA $SSO #moneymanagement http://t.co/fPQLEGE1z0
Ebony Neal
24 Nov 14 13:19:39
Are you looking for winners like $MDU $CAB $ARIA $BWP Click http://t.co/7ucxgayk4j
John Smith
24 Nov 14 13:17:13
$ARIA gets #Australian approval. Nice AH volume! #cnbc #msnbc $pfe $ctic $dndn $gsk $bac $wfc #money #investing #news $act $agn $RNA
24 Nov 14 13:09:37
P/L: Small gains today, with late day action on $BABA adding some life into the slow day $AEMD $GPRO $ARIA $IBM $INTC http://t.co/IUtTAUC9u7
Jenee Lemons
24 Nov 14 13:02:59
#Stocks to hold onto $ARIA $MORN $ILMN $BLOX Visit http://t.co/jFeGuiAe6U
24 Nov 14 13:01:37
$ARIA Short entry points, enjoy folks! http://t.co/pbG0vNrZ08
24 Nov 14 13:00:47
MidCap #Stocks Trend $ARIA $CDW $INCY $TTC $CNK $STRZA $ENDP $COH $KLAC $CRL $M $BBY $AVY $CVC $FBHS $BRCD @ http://t.co/gYYX3fEVde
24 Nov 14 13:00:30
MidCap #Stocks Performance $THRX $ARIA $DDD $JCP $URBN $SHLD $GPS $CDW $INCY $FL $TTC $MYGN $EW $PANW more@ http://t.co/gYYX3fEVde
24 Nov 14 12:59:41
gianf Cap
24 Nov 14 12:59:13
$aria go baby go!!!
24 Nov 14 12:56:37
@trader_mood Are you still short $ARIA
24 Nov 14 12:55:15
$ARIA multi day run looking strong
John Smith
24 Nov 14 12:55:11
$ARIA - NEW HOD soon????? #cnbc #msnbc $pfe $ctic $dndn $gsk $bac $wfc #money #investing #news #breakingnews $act $agn $RNA
Bidness Etc
24 Nov 14 12:54:44
Ariad Pharmaceuticals Shoots Up On Drug Approval, Insider Buying http://t.co/l1cErauvmN $ARIA
Merideth Walling
24 Nov 14 12:48:36
Stocks to Watch this week $ARIA $SHLD $TCB $AIG Visit http://t.co/NIZn4yaAmF
Kris Sidial
24 Nov 14 12:48:35
All out $ARIA nice A B C and half a D lol I'll take it though!!
24 Nov 14 12:41:23
$ARIA nice continuation... updated chart http://t.co/aSPFSND8ww
John Smith
24 Nov 14 12:37:53
@trader_mood Shorting $ARIA is a huge mistake now. Play it right or get burnt.
24 Nov 14 12:35:23
$ARIA Shhhh, do not get too excited just yet:)
®مستشارك المالي®
24 Nov 14 12:31:53
#NYSE #DOW_JONES $AAPL $GOOG $FB $AMZN $PCLN فرصه استثماريه #اوبشن $ARIA 7 call 20Des op:45 cent السهم يستهدف ٨$ #مستشارك_المالي
24 Nov 14 12:30:22
$ARIA shorted 7.18 (last) spike, gotta luv this play") House money baby!!!
24 Nov 14 12:29:03
Strong performers today $RAX $ARIA $RCPT $REGN $CELG http://t.co/49tjdBs5zr
EF Hutton
24 Nov 14 12:28:23
RT @NETCTO: @BarrenWuffett2 @EFHutton1 I took a look at $ARIA and I am getting in.
24 Nov 14 12:27:05
$ARIA back to high target 8.00
John Smith
24 Nov 14 12:25:57
$ARIA surging 11% on #Australia approval! #cnbc #msnbc $pfe $ctic $dndn $gsk $bac $wfc #money #investing #news #breakingnews $act $agn $RNA
John Smith
24 Nov 14 12:24:44
$ARIA surging partnership/buyout? VOLUME! #cnbc #msnbc $pfe $ctic $dndn $gsk $bac $wfc #money #investing #news #breakingnews $act $agn $RNA
John Smith
24 Nov 14 12:24:06
$ARIA - wow! HUGE VOLUME AND SURGE! #cnbc #msnbc $pfe $ctic $dndn $gsk $bac $wfc #money #investing #news #breakingnews $act $agn $RNA
John Smith
24 Nov 14 12:23:20
$ARIA surging 10% on #Australian approval! #cnbc #msnbc $pfe $ctic $dndn $gsk $bac $wfc #money #investing #news #breakingnews $act $agn $RNA
Victor Roberts, MD
24 Nov 14 12:23:00
Commented on StockTwits: It broke through that wall easily! $ARIA pls close HOD. Thanks MM in advance. LOL http://t.co/LWdg9nPjBt
24 Nov 14 12:22:32
$ARIA nice idea here
24 Nov 14 12:21:58
$ARIA perk
John Smith
24 Nov 14 12:21:48
$ARIA surging 10% on #Australia approval #cnbc #msnbc $pfe $ctic $dndn $gsk $bac $wfc #money #investing #news #breakingnews $act $agn $RNA
John Smith
24 Nov 14 12:21:29
$ARIA surging 10% on #Australia approval! #cnbc #msnbc $pfe $ctic $dndn $gsk $bac $wfc #money #investing #news #breakingnews $act $agn $RNA
24 Nov 14 12:18:50
$ARIA would this have more range this could be a nice OED pusher...with that range not with me
mark martinelli
24 Nov 14 12:15:27
$aria looks good to go higher from here
24 Nov 14 12:14:55
$ARIA short o/n!
Stephen s
24 Nov 14 12:07:02
RT @StockerPenny: Wowser $ELED in breakout mode. Going long on the 8k news. $ARIA $MYEC $SWET
Foster Corral
24 Nov 14 12:04:59
#Stocks you migh want to Sell $AN $ARIA $ACT $FB #NASDAQ http://t.co/iE6CGsPDca
Sanora Shoemaker
24 Nov 14 11:56:54
Small-cap stocks breaking 52-wk high prices $ARIA $NYX $FDS $CBM #wallstreet http://t.co/vXJiPbOB49
Caitlin Cohen
24 Nov 14 11:49:25
Here are some Stocks to Watch $PFE $X $ARIA $GOOG I suggest http://t.co/4hUYE5XwhZ
24 Nov 14 11:36:52
RT @tabuhasna: $ARIA $QASP $VGPR $PSID $$$ hmm I feel that stuffing already... Green stuffin in my pocket that is... $$$
24 Nov 14 11:29:09
I call it a day. Nothing major but $ARIA was a nice pick. +60$ today.
24 Nov 14 11:29:02
$ARIA drug is indicated for the treatment of adult patients with leukaemia. Commercial launch of Iclusig is expected to occur early in 2015.
24 Nov 14 11:28:41
$ARIA Iclusig Approved In Australia For Leukaemia -- Shares Up More Than 7%
24 Nov 14 11:26:40
$ARIA short, there she goes!
24 Nov 14 11:21:14
Let's see my calls this last month. $ACI UP and still going from 2.49... $MDLZ up and still going from 37.06.. $ARIA UP 8%,,,whole lotta UPS
24 Nov 14 11:19:36
Wowser $ELED in breakout mode. Going long on the 8k news. $ARIA $MYEC $SWET
24 Nov 14 11:17:10
RT @DForman27: $aria !!!!!!!! Christmas is gonna be good this year. Australia approval came out of left field.
By  +Follow January 27, 2014 8:25AM



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