Short Sellers Surround Biotech as "Sell" Signal Sounds

NVTA is encountering a historically bearish trendline at the moment

Managing Editor
Jan 17, 2020 at 12:15 PM
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Biotech InVitae Corp (NYSE:NVTA) is down 2.3% this afternoon -- set to snap its three day win streak -- though the catalyst is unclear. Prior to today's drop, the equity was recovering from its early January lows near $15, but remains up 22% year-to-date. However, supported by today's drop, now might be the time to take a step back from NVTA, as data from Schaeffer's Senior Quantitative Analyst Rocky White suggests the stock is flashing a sell signal.

Specifically, InVitae stock has recently come within one standard deviation of its 160-day moving average, following an extended period below the trendline. The equity has seen one similar pullback within the past three years, which resulted in an average 21-day loss of 21.63%. Another blow of this magnitude from the stock's current perch of $19.76 would send NVTA back near $15.50.

Daily NVTA with 160MA

Short sellers would certainly cheer the pullback. Short interest on NVTA surged 10.8% during the most recent reporting period, and accounts for a notable 20.8% of the stock's available float. In other terms, this equates to nearly 11 days' worth of pent-up buying power, at the medical research name's average pace of daily trading.

There looks to be room for downgrades on the equity, too. Coming into today, all but one of the seven covering firms sport a "strong buy" recommendation on InVitae stock, with zero "sells" on the books.

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