There's no denying that OXiGENE Inc. (NASDAQ:OXGN) has, if nothing else, an interesting pipeline. And for many investors, the prospect of one or two budding winners in development is more than enough reason to jump into a biotech stock. In the case of OXGN, however, there's a far more direct - and no less speculative - reason to become a shareholder. That reason? The stock's going higher.... seriously.
If the name rings a bell, it may be because OXiGENE is the outfit developing Zybrestat and a Phase 1 drug called OXi4503. The bulk of the ailments both drugs are taking aim at are some form of cancer, targeting the disease through vascular disruption. That's a ten-dollar term for a process that specifically restricts the blood flow from tumor cells, cutting off the oxygen and nutrients that are required of any cell to continue living. The drug works well enough against thyroid cancer to be allowed into Phase 3 trials, with a handful of other cancers in Phase 2 trials with Zybrestat. And to call a spade a spade, it's progress on the drug-development front that's put some bullish pressure on OXGN over the last several weeks. In fact, the stock's progress has been so solid lately that it has become the compelling part of the story here. See, the recent bullishness has hammered out some huge technical bullish clues.
The weekly chart of OXGN really puts things in perspective. Though you can't see it on the chart, this stock has been in trouble since 2010. What you can see on the chart is from where the 200-day moving average line (green) was coming from as it enters the char on the left side in early 2012; this stock was valued around $300 in early 2010, and was trading in the $1400 area in 2005 (pre-split pricing). Point being, this stock has been beaten down pretty severely... until the last few months. Beginning in September, things changed. That's when the stock started to make higher lows, and started to move above its key moving average line for the first time in years. In fact, it's moved above those lines in three separate waves now, with the current strength being the third one. As they say, though, the third time is the charm. Given the progress we've seen thus far, odds are good that this time, OXiGENE are going to keep rolling.
It's not just a weekly chart that has a lot of bullish implications, however. The daily chart of OXGN tells the same story.
Ever heard that periods of low volatility (for the market, and for stocks) are followed by periods of high volatility, and vice versa? Well, up until September of last year, OXiGENE Inc. was in a volatility phase... a bearish one. In September, that volatility was reeled in, and shares of OXGN entered a low volatility phase, stuck between a mildly rising support line and a mildly falling resistance line. It's a lot of up and down, but on a net basis, there was no progress - a period of low volatility. As evidence of that reality, notice how all the short-term moving averages have converged with all the longer-term moving averages line all right around $2.70. We haven't seen this kind of convergence in years.
You know what that means? It's time for a volatility to ramp up again, only this time, the budding undertow says that volatility is going to be bullish.
Bottom line: Sometimes you have to just trust what the chart is telling you. Time to wade into OXiGENE Inc.
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