I'm exactly 0.0% surprising that Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) shares are taking off today, to the tune of 25%. The only thing I'm surprised about it that it took this long for the brewing surge from ARIA to materialize.
If you've got no idea what I'm talking about, here's a brief synopsis... back on January 13th I made a point of saying the lull from ARIA at the time was temporary, and that the period before the lull had already indicated the bigger undertow was already bullish. It was just going to be a matter of time before Ariad Pharmaceuticals ran into the "right time, right place" scenario. Today's when it happened. (Yesterday was the day, technically, but the effort didn't get major traction until today.) Now that it has, though, the stock's apt to keep rolling for a while.
How so? Take a look at the daily chart of Ariad Pharmaceuticals, Inc. below. As you can see, the stock was stuck in a range between $5.30 and $7.85 for the better part of the past month and a half. But, with today's big nudge, that upper ceiling has been hurdled, and there's nothing left to hold it down. Better still, today's surge has also pushed ARIA above the 100-day moving average line ... another key technical catalyst working in favor of the budding rally.
But ARIA is only up today on chatter of a potential acquisition? I couldn't have possibly predicted that? No, I can't deny that news of a buyout was what I saw coming, but that was never the point. I just knew something catalytic was coming, and coming soon. See, the market abhors a news vacuum, and in the absence of any news from the company, eventually it will fill in that void with news about the company... even if it has to create that news from thin air.
That's not to say there's no legitimacy to the premise that Ariad Pharmaceuticals could be an acquisition target, but look closer at the "news" - the company had no hand in it, nor has it responded to it. It's just an idea ...an idea that applies to hundreds of other companies, by the way, none of which are rallying as well as ARIA is today. Yet, since early yesterday, that mere idea was prompted five different stories from legitimate financial news sources in less than two days, versus less than five actual news stories about Ariad over the course of the prior two weeks.
Point being, it was just time for the market to flip the ARIA switch back to the "on" position. Now that it's turned on again, the stock should get at least a few more days' worth of bullishness.
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