JUNO Stock Just Sent Up a Buy Signal

Juno Therapeutics tends to rally sharply after meeting up with its 40-day moving average

Managing Editor
Oct 19, 2017 at 2:24 PM
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Biopharmaceutical stock Juno Therapeutics Inc (NASDAQ:JUNO) has been moving primarily sideways on the charts in recent months, despite managing to hit twin peaks around the $47 level in September. However, the stock just met up with a key trendline that has had bullish implications in the past. If history repeats itself, JUNO stock could be screaming "buy" right now.

According to Schaeffer's Senior Quantitative Analyst Rocky White, the stock is now trading within one standard deviation of its 40-day moving average after a lengthy stint above this trendline. Following the last four pullbacks to this moving average, JUNO was up 9.5%, on average, one month later, and was higher 75% of the time. A similar 9.5% rally from the stock's current perch around $42.88 would place JUNO back in the neighborhood of those September highs.

Daily Chart of JUNO Since Jan 2017 with 40MA

However, it's worth noting that the very short-term returns after one of these 40-day signals are much less bullish. Five days after one of these signals, JUNO was higher only 50% of the time, and down nearly 3% on average. In other words, while the next few days could be volatile for JUNO, there's a higher-than-usual probability that the equity's consolidation into its key 40-day moving average will result in the stock trading comfortably higher a month from now.

Should JUNO stock continue its ascent, plenty of shorts could get squeezed. Short interest dropped more than 35% over the past two reporting periods, but still accounts for 15.6% of the stock's available float. A continuation of this short-covering activity could aid JUNO's latest bounce from its 40-day moving average.
 

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