Short Sellers Surround Biotech as "Sell" Signal Sounds

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.

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.