It's Not Too Late to Make This Switch (ABIO, GWPH)

Three days ago I suggested Arca Biopharma Inc. (NASDAQ:ABIO) was a buy, recommending anyone who was lucky enough to own GW Pharmaceuticals PLC (NASDAQ:GWPH) at the time take their profits on GWPH and place that money in Arca. After several weeks' worth of buildup, and after finally seeing a decided break above the horizontal ceiling at $1.50, ABIO looked like it had rocked its way out of a rut and was headed for sunnier skies and greener pastures.

Murphy's law kicked in the next day. ABIO pulled back from a close of $1.68 on Monday, the 7th, to a low and close of $1.51 the next day. On Wednesday (the 9th) we saw the stock reach a low of $1.40, which would have deflated a lot of hopes that Arca Biopharma really had a shot at going anywhere.

As they say though, things are darkest before dawn, and patience is a virtue.

While Arca Biopharma Inc. looked like a train wreck early on Wednesday, that brush with support at the 50-day moving average line (purple) was all the second chance anybody who missed the first runup needed. The bulls started to plow back in, and by the end of the day shares were back above the 20-day and 100-day moving average lines (blue and gray, respectively). That move also carried ABIO back above the big line in the sand at $1.50, confirming just how serious the bulls are here. Today's action confirms the buyers have drawn a mental line in the sand here; today's low simply brushed the 20-day line, and boom - the buyers stepped in again. It all points to a very bullish, even if obscured, undertow.

The bottom line and prediction? The same as it was a couple of days ago... Arca Biopharma Inc. shares are most likely going to revisit the $2.40-ish area before it's all said and done. That's the upper edge of the bearish gap the stock left behind in May, which is still aching to be closed.

For what it's worth, GW Pharmaceuticals PLC shared did end up peeling back quite a bit, beginning the very next day. GWPH closed at $31.86 on the 7th, and reached a low of $24.00 yesterday. That was enough to close the gap it left behind at Tuesday's open. Given today's solid upturn from GW Pharmaceuticals PLC though, it would be easy to start assuming the best for GW again. DON'T! Though it's up today, the volume behind the buying effort is very, very feeble. Shares are still overbought and due for more of a dip than this. Translation: It's actually not to late to swill make the swap... ABIO for GWPH.

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