Citron Favorite Flashes Buy Signal

Invitae stock just pulled back to its 40-day trendline

Managing Editor
Aug 16, 2019 at 12:04 PM
facebook X logo linkedin

When we last checked in on InVitae Corp (NYSE:NVTA), the genetic testing concern was fresh off a lofty bull note from Citron Research. Since nabbing an earnings-induced record high of $28.75 on Aug. 7, the shares have pulled back sharply, down 6.3% month-to-date. However, this Citron favorite -- which has more than doubled in 2019 -- is now flashing a "buy" signal, thanks to an encounter with a historically bullish trendline. 

More specifically, data from Schaeffer's Senior Quantitative Analyst Rocky White shows that NVTA has historically performed well after meet-ups with its 40-day moving average, with the stock averaging a one-month return of 6.5% following the last eight signals. As you can see from the chart below, this trendline has neatly contained the stock's August pullback. From its current perch at $25.18, a jump of similar magnitude would have NVTA back near $26.80.

Daily Stock Chart NVTA

A rally could be jump-started by a continued exodus of short sellers. Short interest fell 6.2% in the most recent reporting period, but these bearish bets still account for 21% of the equity's total available float, or nearly a week's worth of pent-up buying power, at the average pace of trading.

There could also be an unwinding of pessimism among options traders. The stock's 10-day put/call volume ratio of 0.47 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks 4 percentage points from an annual high. This shows that while calls have been more popular than puts on an absolute basis during the past 10 days, the rate of put buying relative to call buying has been quicker than usual.

Echoing this sentiment is the security's Schaeffer's put/call open interest ratio (SOIR) of 0.78, which ranks in the 98th percentile of its annual range,. This indicates near-term traders have rarely been more put-biased toward the genetics testing name.

It's certainly an attractive time to purchase premium on NVTA short-term options, considering they're pricing in relatively low volatility expectations at the moment. This is based on the stock's Schaeffer's Volatility Index (SVI) of 68%, which registers in the 14th percentile of its annual range. Plus, Invitae stock has a history of making bigger moves than the options market was pricing in, according to the security's Schaeffer's Volatility Scorecard (SVS) reading of 98 out of 100.


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 calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI