The ASCO Effect move often starts in April. But there's almost always an additional stretch in May during which oncology stocks experience near-vertical spikes in very short periods.
This second leg of the ASCO Effect usually involves a large handful of stocks. And it happens every year. For instance:
In May 2010, Delcath Systems Inc. (Nasdaq: DCTH), a development-stage biotech specializing in liver cancer, saw its shares rise 30% in 21 days. That was the culmination of a longer-term (and wildly whipsawing) surge that started in mid-March and sent the shares up as much as 164%.
In 2009, shares of Dendreon Corp. (Nasdaq: DNDN) went from $6.30 a share in early April to $25.74 in early June - a gain of 309%. If you go back even further, you'll see that Dendreon's stock went from $2.60 in early March to $25.74 at the start of June - a near 10-bagger.
Starting in early May 2008 (and reaching its peak that June 6), Celldex Therapeutics Inc. (Nasdaq: CLDX), gained exactly 50% in slightly less than 30 days. That was the final burst of a 2½-month move that saw the shares gain 142%.
But here's the thing: Although this can be tremendous fun while it lasts, the "ASCO Effect" is more of a trading opportunity than an investment. The gains generally don't stick, meaning you need to get out ahead of the investor exodus.
OXiGENE shares, which traded as high as $6.07 during its surge last May, dropped all the way down to 92 cents each by the following October. Today, the company trades for 95 cents.
[Editor's Note: In Bill's latest research report he has identified three oncology stocks that could benefit from the "ASCO Effect." But that's only one of the ways investors can profit from them.
Bill intentionally picked companies with long-term growth potential. That gives shareholders a shot at the profits being reaped from the current surge in multi-billion-dollar biotech buyouts.
To get Bill's report -"The Biotech Buyout Binge: Why These Three Stocks Could Double Your Money in the Next Three Months" - justclick here. ] News and Related Story Links: