Cancer drug investors who have been disappointed in recent results from shares of Clovis Oncology Inc. (NASDAQ:CLVS) or Nuvilex Inc. (OTCMKTS:NVLX) lately may want to take a look at ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) as a replacement for either of those first two stocks. CLVS is down about 16% for the week on a less-than-flattering write-up in a Bloomberg publication, and NVLX has moved under a pair of key moving averages this week because, well, for no specific reason, but broadly because the recent wave of compelling news is already losing its potency, with most of that upside already being priced into shares (and then some) before it became official.
Neither chart looks especially encouraging for the foreseeable future either. With the recent move back under the 20-day, 50-day, and 100-day moving averages, Nuvilex confirmed its second lower high, and has more room to fall before finding a floor. of Clovis Oncology shares still have a huge unfilled gap from June's jump that's begging to be closed. Meanwhile, ZIOPHARM Oncology shares have just started to break out of a long-term funk, and there's a ton of upside left to tap.
If the ticker ZIOP rings a bell, it may because yours truly made a point of penning the fact that a rebound started to bloom a long time ago. Back on July 16th it was noted how the stock was recovering well after plunging in March on news that its sarcoma drug, Palifostamide, had failed to meet its Phase 3 goal. The concern then wasn't that ZIOPHARM Oncology shares weren't strong enough. Rather, the concern was that they were too strong to hold up at their price at the time. The fact that they were pausing at $2.98 - a key ceiling at the time - only underscored the need to wait for a dip within the bigger picture uptrend.
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That dip did develop, by the way, though only after ZIOP hit a top at $3.30 on the 17th of July. Regardless, patient onlookers got a chance to get into a trade as low as $2.70 a couple of days later, and sure enough, the bigger uptrend kicked in again.
The best, however, had yet to come.
Though it took more than another month - and a lot more volatility - to get going, ZIOPHARM finally worked its way into a situation that's highly bullish now. One of those bullish clues is the fact that shares have been trapped in a narrow trading range between $2.98 and $3.33 since early August; the narrower the range and the longer the stock stays range-bound, the more explosive the breakout is once it begins. The second bullish clue telling us that ZIOP is now off and running is the fact that it's also moved above all of its key moving average lines. Today's pop is just the clincher. That said...
While today's big surge from ZIOPHARM Oncology Inc. may be the clincher, the sheer size of the 17% advance will likely set up something of a bearish pushback in the coming week. That shouldn't up-end the bigger rally effort, however. The hard work has been done. Now ZIOP just needs to find a bullish groove above $2.33, and that could take a couple of days. For traders, however, it's worth the wait.
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