When we last wrote about Arrowhead Research (ARWR) three months ago, we noted a long-term asteroid belt of resistance around the $7 area. The key to watch for, we thought, would be how the shares behaved as they reached this region. As you can see on the chart above, the first push through $7 was turned back, quickly sending the shares below $6.50. The next try was destined for failure. The low volume told us there was no energy behind the second attempt.
That was the end. But we didn’t forsee the catastrophe that followed. ARWR lost half its value in two months.
A week ago, ARWR blasted out of its downtrend and has held above its 20-day moving average. The shares have not made much progress since the initial surge, but that is to be expected. Surely, there are some eager sellers out there. The fact that ARWR did not get hammered back down to its lows, however, provides some reason for optimism here. The shares won’t see $7 anytime soon, but we think it is likely that they go up from the current $3.62 price. Just be careful with it — this is only for the more speculative types.