Multiple Reasons to Keep Off This Pharma Stock

The 60-day trendline has historically brought headwinds to BMY

Digital Content Manager
Aug 30, 2023 at 1:42 PM
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Bristol-Myers Squibb Co (NYSE:BMY) is down 0.7% to trade at $62.42 at last check, after the Biden administration included the pharmaceutical name's blood thinner Eliquis in its list of 10 prescription drugs that will undergo Medicare price negotiations as part of the Inflation Reduction Act (IRA). Not only does the equity sport a deficit of 13.2% for 2023, but it's now running into a trendline with historically bearish implications.

The trendline is question is Bristol-Myers Squibb stock's 60-day moving average, which is just one standard deviation away, per Schaeffer's Senior Quantitative Analyst Rocky White. In the past three years, BMY saw six comparable signals, finishing lower one month later 83% of the time with an average 3.5% loss. A similar move would put shares back around $60. 

BMY 60 Day

Long puts have been more popular than usual. The equity's 50-day put/call volume ratio of 1.53 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 82% of readings from the past 12 months.

The security sports attractively priced premiums, making now an ideal time to bet on a move lower. Specifically, BMY's Schaeffer's Volatility Index (SVI) of 17% sits in the 14th percentile of its annual range, suggesting options traders are now pricing in low volatility expectations. 

 

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