The shares tend to rally after pulling back to their 160-day moving average
The shares of biotech Exelixis, Inc. (NASDAQ:EXEL) -- which makes Cabometyx -- have been in a channel of higher highs and lows since early 2016, gaining 55% over the past year. Since its most recent test of the $32-$32.50 range -- home to its Oct. 16 record high -- earlier this month, EXEL stock has given back about 13%, and was last seen 0.3% lower to trade at $27.80. However, the drug stock could be a steal at current levels, if recent history is any indicator.
Specifically, Exelixis stock recently came within one standard deviation of its 160-day moving average, after a lengthy stretch above this trendline. Historically, pullbacks to this trendline have been buying opportunities for EXEL bulls. After the last four signals, EXEL shares were higher one month later 75% of the time, averaging a gain of 11.61%. A similar rally from current levels would place the security around $31 -- within striking distance of new-high territory.
Should the equity resume its quest for record highs, a continued short squeeze could propel EXEL even higher. Short interest declined 7.1% during the most recent reporting period, but these bearish bets still account for nearly 17 million Exelixis shares. At the stock's average daily trading volume, it would take more than six sessions to repurchase these pessimistic positions -- plenty of fuel for additional gains.