Sarepta Therapeutics stock is trading near a historically bullish trendline
After touching a nearly four-year high of $173.25 on June 21, shares of biotech firm Sarepta Therapeutics Inc (NASDAQ:SRPT) steadily worked lower on the charts, touching a more than two-month low of $123.50 on Aug. 9. It's not all bad, however, as SRPT posted gains in five its last six sessions, putting its year-to-date lead at 39.3%. What's more, a historically bullish signal is flashing on the charts.
According to data from Schaeffer's Senior Quantitative Analyst Rocky White, Sarepta Therapeutics stock is within one standard deviation of its 126-day moving average. The equity saw four similar signals over the last three years, defined for this study as having traded north of the moving average 80% of the time in the past two months and in eight of the last 10 trading days.
The shares finished higher one month later in 75% of those instances, averaging a gain of 11.1%. A move of similar magnitude from SRPT's current perch would put it just shy of the $150 mark.
It's also worth noting that short interest is down 29.7% over the last month, yet the 6.72 million shares sold short still account for 7.5% of Sarepta Therapeutics stock's total available float. At the equity's average pace of trading, it would take shorts more than three trading days to buy back their bearish bets.
Now looks like the right time to speculate with options, as the stock's Schaeffer's Volatility Index (SVI) of 36% sits in the low 3rd percentile of readings from the past year. This indicates options traders are now pricing in lower-than-usual volatility expectations.