Signal Says Biotech Stock Isn't Done Climbing Yet

The shares of Halozyme Therapeutics, Inc (NASDAQ:HALO) are up 3.6% to trade at $30.54 at last check, after earlier hitting an all-time-high of $30.88. And while the biotech company already enjoys an impressive 98.8% lead year-to-date -- with support from the 120-day moving average over the last several months -- a historic bullish signal now flashing on the charts could indicate even more upside for HALO in the coming weeks.

Specifically, the stock's recent peak comes amid historically low implied volatility (IV), which has been a bullish combination for the equity in the past. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have only been two other times in the past five years when HALO was trading within 2% of a 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower -- as is the case with the security's current SVI of 50.2%, which sits close to the 15th percentile of its 12-month range. Data shows HALO was higher a month later, averaging a 9.4% return for that time period. From its current perch, a move of similar magnitude would put the Halozyme Therapeutics stock just above $33, at yet another record high.

Short sellers are already hitting the exits, so a short squeeze could create even more tailwinds for the security. Short interest is down 5.2% in the last two reporting periods, yet the 14.63 million shares sold short still makes up a substantial 10.1% of the stock's available float. It would take roughly three weeks to buy back these bearish bets, at the security's average pace of trading. 

There could also be an unwinding of pessimism in the options pits, where puts are popular. This is per HALO's Schaeffer's put/call open interest ratio (SOIR) of 1.45, which sits in the 94th percentile of its annual range -- meaning short-term options traders have rarely been more put-biased.