EXAS recently pulled back to a trendline that's had historically bullish implications
Shares of cancer screening specialist EXACT Sciences Corporation (NASDAQ:EXAS) are climbing today, up 3% to trade at $62.16 at last check. This is a good sign for the stock, which had pulled back following its ascent to record highs in mid-June. And EXAS could be headed even higher in the near term, if history is any guide.
Exact Sciences stock has gained 72% year-over-year, but after hitting that record high of $71.59 on June 18, the equity has pulled back to within one standard deviation of its 40-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White, following the last seven times this has happened after EXAS had been trading above this trendline for a significant length of time, the stock went on to average a one-month gain of 8.24%, with six of the seven of returns positive.
A round of short covering could also keep the wind at EXAS' back. Short interest fell in the two most recent reporting periods, yet the 14.76 million shares sold short accounts for a healthy 12.6% of the equity's available float. It would take more than seven days for these shorts to cover, at the average pace of trading.
Options traders have already been displaying bullish tendencies. The out-of-the-money July 65 call is home to peak front-month open interest, with significant buy-to-open activity. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) confirms this call bias, with the number of long calls bought to open almost doubling puts in the past 10 days.
Those wanting to bet on more summer upside for EXAS stock may want to consider doing so with options. The security's Schaeffer's Volatility Index (SVI) of 48% ranks in the 25th percentile of its annual range, meaning short-term options are pricing in relatively low volatility expectations at the moment.