Buy the Dip on This Pharma Stock

INVA shares shed 17.3% last week, but could find familiar support

Managing Editor
Feb 7, 2019 at 2:39 PM
facebook twitter linkedin


Few stocks have had as rough a start to February as Innoviva Inc (NASDAQ:INVA). The pharma name shed 17.3% last week alone, and has extended those struggles to this week. However, this pullback, if history is any guide, could present a buying opportunity for INVA bulls. 

More specifically, Innoviva stock is now trading within one standard deviation of its 320-day moving average. The last nine times INVA pulled back to this moving average after a lengthy stretch above it, the equity was up 4.9%, on average, one month out, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

At last check, Innoviva stock was up 1.9% to trade at $15.67, erasing early post-earnings losses. The stock is also shrugging off a price-target cut to $22 from $23 at Berenberg. What's more, INVA's 14-day Relative Strength Index (RSI) was docked at 27 at Wednesday's closing bell -- well into oversold territory, leaving the security well-positioned to bounce in the short term.

Daily Stock Chart INVA

For a stock that nabbed a three-year high of $20.54 as recently as Jan. 30, INVA is represented well among short sellers. The 17.97 million shares sold short is the most since April 2017, and represents a whopping 27% of the equity's total available float. Should the security start to climb again, it would take shorts nearly 16 days to buy back their bearish bets, at INVA's average daily trading volume.

 

 

 

These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!

 

Common mistakes options traders make
 


 


 
Special Offers from Schaeffer's Trading Partners