Time to Buy These 2 Pharma Stocks

Pullbacks to the 50-day trendline have had bullish implications over the past year

Apr 11, 2018 at 2:03 PM
facebook X logo linkedin

Biotechs struggled in the latter half of March, with the iShares Nasdaq Biotechnology ETF (IBB) shedding more than 13% from its mid-March high of $115.60 to its early April lows just north of $100. The shares have since bounced off the century mark and are now trading back above their 10-day moving average. Individual drug stocks Nektar Therapeutics (NASDAQ:NKTR) and Zoetis Inc (NYSE:ZTS) have pulled back to key trendlines, too, and could be headed even higher, if history is any guide.

Nektar Therapeutics Stock Bounces from 50-Day Trendline

Nektar Therapeutics stock topped out at a record high of $111.36 on March 12, before pulling back to its 50-day moving average -- the best buy signal over the past year, according to Schaeffer's Senior Quantitative Analyst Rocky White. More specifically, S&P 500 Index (SPX) stocks that have retreated back to this trendline in the last 12 months were 1.37% higher, on average, one month later.

nktr stock daily chart april 11

More broadly, NKTR shares are up 70.9% year-to-date to trade at $101.93, yet options traders have been buying to open puts over calls at a quicker-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.18 ranks in the 90th annual percentile. While some of this activity could be bearish, it's likely shareholders are initiating options hedges, too.

Outperforming Zoetis Stock Overdue for Upgrades

Zoetis stock also pulled back to its 50-day trendline recently, after the security hit an all-time peak of $85.73 on March 21. More recently, the shares were trading at $83.06, up 15.3% so far in 2018.

zts stock daily chart april 11

Part of this upside has been fueled by short sellers. Short interest has been cut in half year-to-date to 3.8 million shares. While this source of buying power has been nearly depleted -- it would take fewer than two sessions to cover the remaining shares, at the average pace of trading -- six of 16 analysts maintain a tepid "hold" rating on ZTS stock. Upgrades could create bigger tailwinds for the equity.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI