Reality Checks for FBC, ARIA, and SNSS

The market's on pace to end the day flat - the sixth 'non gain' in the last 29 sessions. Just how long can stocks keep this pace up? Great question.... it's certainly surpassed all my expectations regarding time and distance. Anyway, there are a few small cap stocks to watch going forward - Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS), and Flagstar Bancorp, Inc. (NYSE:FBC). Here's what to look for, if things aren't panning out already.

Far be it for me to be the wet blanket here, but there's an 800 point gorilla in the room that somebody needs to bring up. Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is overbought. In fact, not only is it overbought, but ARIA started to pay the price for being overbought today. Today's dip, however, likely isn't the end of it.

The red flags were actually waving yesterday, when volume for ARIA hit a multi-month peak at the same time we saw this small cap stock open at the low for the day, make a peak with its new high, and then retreat back a little too far down its daily range. It's a subtle hint that the Ariad Pharmaceuticals buyers were passing the torch to the sellers in the middle of the session. Today's not-so-subtle downside move confirms the notion.

As for a target, there's a long-term support line market in blue on the chart of Ariad Pharmaceuticals, Inc. below. It actually extends back to late 2008, and has several nodes. So, I wouldn't expect this stock to sink any lower than that level. Still, there's more than one full point between here and there.



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Slowly but surely, Flagstar Bancorp, Inc. (NYSE:FBC) continues to knock down resistance lines, thanks to a little help from what's now a long-standing support line. While I confess I'm a little hesitant to dive into FBC in the shadow of a 35% gain over the last month, the reality is, this small cap's probably still just at the beginning of an upswing.

You'll have to trust me on this one.... the horizontal support at $0.58 goes way back further than you can see on the FBC chart. You can tell, however, that Flagstar Bancorp have blown past two falling resistance lines that also go way back. Volume is also starting to firm up.

So what's the problem? All of it looks bullish, right? I think my issue is the size of the move since mid-February.... from $0.60 to the current price of $0.84. Had the chart just started there, calling this stock 'overbought' would be a no-brainer. For Flagstar Bancorp, Inc. though, that kind of move is not even par for the course - this stock has rallied in the face of worse. Since my gut can be misled, I think we have to interpret things scientifically here, and go ahead and deem FBC a 'buy' - especially now that the 200-day moving average line has been re-crossed.  



And finally, Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) just went from bad to worse with today's 8% dip. I don't think this is going to be "just a little volatility" that SNSS is going to be able to overcome anytime soon.

The last bastion of hope for SNSS was support at $0.79, where this small cap managed to make an upside reversal in mid-February, and then where it managed to stop the bleeding again in early March. Today though, with the move to a lot of $0.72, the floor was snapped. Perhaps the problems caused by the recent slide back under the 100-day moving average line (grey) were just more than the Sunesis Pharmaceuticals could handle.

In any case, there's not another floor for Sunesis Pharmaceuticals, Inc. until the $0.28 area, where the rally got started back in December. Yes, that's quite a tumble, but I don't see anywhere else this stock's going to be able to get a foothold. 

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