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

By  +Follow January 27, 2014 8:25AM
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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
Trader News Daily
22 Sep 14 18:11:45
http://t.co/PeRPkYu8Uk ranked #1 for alerts last week with 605% in gains. Related: $JBLU $NLY $OREX $EGO $SAN $ARIA $NETE $HYSR $XCO $TLM
Small Cap Strategist
22 Sep 14 17:32:22
Most searched small-cap stocks, Mon Sept 22nd - $IFON $KNDI $NWBO $TASR $ZNGA $ARIA $CENX - More: http://t.co/1znvSOIJVT - #smallcap
Stockaholics
22 Sep 14 16:14:03
$ELRA Shot up 125.71% today, after our special update! Get our newsletter picks early: http://t.co/U3sURxFQcZ $FASC $ARIA $TUCN
Don Seiffert
22 Sep 14 13:37:29
Departure of $ARIA director sparks speculation that Berger's days are numbered (slightly clarified at 4:30 today) http://t.co/VSyllUytV6
Brad Loncar
22 Sep 14 13:31:16
RT @jq1234t: @bradloncar @DewDiligence Very similar to $ARIA financing in June: http://t.co/jwyoor70EF
JQ
22 Sep 14 13:29:56
@bradloncar @DewDiligence Very similar to $ARIA financing in June: http://t.co/jwyoor70EF
Victor Roberts, MD
22 Sep 14 13:00:21
Commented on StockTwits: Looks like portfolio re-balancing by hedge funds and institutes! $ARIA Accumulation goin... http://t.co/FJCfT51Cnp
Darth Brooklyn
22 Sep 14 12:34:35
$ARIA 5.60 hanging on for dear life.
crhz1978
22 Sep 14 12:01:14
$ARIA getting ready to rally - should be trading around $25/share! $BABA $pfe $jnj $dndn $ctic $kerx $GSK #Ebola $aapl $REGN $MRK
crhz1978
22 Sep 14 11:55:38
$ARIA getting ready to rally - should be trading around $25/share $BABA $pfe $jnj $dndn $ctic $kerx $GSK #Ebola $aapl $REGN $MRK
Stockaholics
22 Sep 14 11:33:21
$ELRA Shot up 125.71% today, after our special update! Get our newsletter picks early: http://t.co/U3sURxFQcZ $FASC $ARIA $TUCN
WallStreet
22 Sep 14 11:21:03
Wall Street Highlight: $ARIA, $ING, $BRK.B, $USB - - http://t.co/T2pGqa2Etk
Darth Brooklyn
22 Sep 14 11:13:22
$ARIA just made a new daily low ..Through .65 on large volume http://t.co/Ah5IP7wrBd
Christian Kat
22 Sep 14 10:41:33
Sold some $ARIA and got a few more $DRL in Frankfurt just now... :-)
Robert
22 Sep 14 10:14:14
$Aria No light at the end of the tunnel
Darth Brooklyn
22 Sep 14 09:33:20
Just reached 500 twitter followers (Organically!! haha) Thank you!! $BABA $CNET $ARIA $ARNA $KWK $RSH #Swingtrading
The Primary Trend
22 Sep 14 09:23:51
Having followed Arias-$aria since 1991 I can't see this cos "making it" going forward! Sorry $aria lovers. What value if taken over????
Samuel Brown
22 Sep 14 08:01:46
$ARIA Ariad shrinks size of footprint in Kendall Sq. http://t.co/af6ighv9jU
mjnahempboom
22 Sep 14 07:42:27
RT @Ambassador_Cap: http://t.co/cZ0kWQd4kD $GRCU $FITX $DEWM $PMCM $PTAH $XNRG $AFPW $NIHD $ARIA $ERBB $VIIC $ELRA $MINE #AMCAP #PENNYTAK…
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22 Sep 14 07:35:24
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The Primary Trend
22 Sep 14 04:53:14
Re: $aria director has left the board "Something smells in Cambridge" Short of a "miracle drug", I don't see Denner making this work unless?
Stockaholics
22 Sep 14 02:01:46
SECRET Penny Stock Pick, Coming Today! Platinum Members Once Saw it Gain 81% In One Day: https://t.co/WsiOrAqT0s $FASC $ARIA $TUCN
Stockaholics
21 Sep 14 19:34:17
$ELRA closed up 288.89% on over 315 MILLION Volume! Get our new penny stock picks: http://t.co/qloC4OFNEn $FASC $ARIA $TUCN
Stockaholics
21 Sep 14 15:19:24
$ELRA closed up 288.89% on over 315 MILLION Volume! Get our new penny stock picks: http://t.co/qloC4OFNEn $FASC $ARIA $TUCN
OTPicks.com
20 Sep 14 23:33:47
http://t.co/hjgLwIcNgz danrocks: $FCX Picking Up MOMO $GOOG $MFC.TO $ARIA $BBRY: danrocks http://t.co/lgIut9Ldd6 http://t.co/hjgLwIcNgz
Love Penny stock
20 Sep 14 21:27:18
RT @EFHutton1: @BarrenWuffett2 @richer_yu742 thanks Barren I am loading $TSL $GAWK $ARIA $LBTG $CYBK $PTAH and $STEV all discount priced no…
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20 Sep 14 21:27:15
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RT @richer_yu742: I am loading these now $LBTG $TSL $JOEZ $ARIA $GAWK $PTAH #pennystocks
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20 Sep 14 21:26:21
RT @SecretAlrtStocK: $aria $ptah $dgri $vstr $hpnn #pennystocks
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20 Sep 14 14:51:55
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20 Sep 14 10:29:24
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Stock_Tracker
20 Sep 14 10:21:49
$ARIA Recent Headlines Six stocks to watch 4:27 p.m. Feb. 26, 2014 - The Trading Deck 6 stocks to watch 4:34 p http://t.co/2PE1wVy5bz
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20 Sep 14 08:57:25
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Investors Hangout
20 Sep 14 08:57:14
danrocks: $FCX Picking Up MOMO $GOOG $MFC.TO $ARIA $BBRY http://t.co/WqRUoKkRd2
Investors Hangout
20 Sep 14 08:57:07
danrocks: $FCX Picking Up MOMO $GOOG $MFC.TO $ARIA $BBRY http://t.co/UncGznLFe3
danrocks
20 Sep 14 08:28:21
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20 Sep 14 07:25:13
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Investors Hangout
20 Sep 14 07:25:13
danrocks: $CYH Showing on my streamers $ARIA $XLU $ZTS http://t.co/6GPNpJYqTm
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20 Sep 14 07:01:31
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lookn4wins
20 Sep 14 06:57:46
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20 Sep 14 06:54:25
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Investors Hangout
20 Sep 14 06:54:17
danrocks: $ARIA Getting Interesting $BBBY $IBB $AMZN $AMGN http://t.co/9IPjySvApG
Extreme Stocks
20 Sep 14 06:42:14
danrocks: $ARIA Getting Interesting $BBBY $IBB $AMZN $AMGN http://t.co/UO8PHdDbEX
danrocks
20 Sep 14 06:32:29
$ARIA Getting Interesting $BBBY $IBB $AMZN $AMGN $HL http://t.co/4gfKfaG1c0
Stockaholics
20 Sep 14 00:22:33
$ELRA closed up 288.89% on over 315 MILLION Volume! Get our new penny stock picks: http://t.co/qloC4OFNEn $FASC $ARIA $TUCN
Robert
19 Sep 14 21:22:58
$ARIA Harvey Berger is determined to sink with the ship
				
				
By  +Follow January 27, 2014 8:25AM
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