Both securities sport attractive near-term options, too
Healthcare stocks have been on a tear lately, and if recent history is any indicator, two could be flashing "buy" right now. Specifically, Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) and EXACT Sciences Corporation (NASDAQ:EXAS) stocks recently pulled back to key trendlines, which could mark an opportune entry point for short-term bulls.
PGNX Bounce Could Squeeze Shorts
Shares of cancer treatment concern Progenics touched an annual high of $9.41 on Aug. 6, but have since retreated to trade at $7.93. The stock is now within one standard deviation of its 160-day moving average, which has marked big buying opportunities in the past. Specifically, after the last four similar pullbacks, PGNX stock went on to rally an average of 10.33% in the subsequent month, per data from Schaeffer's Senior Quantitative Analyst Rocky White.
Should Progenics stock once again bounce off this moving average, a short squeeze could add fuel to the fire. Short interest jumped more than 10% in the most recent reporting period, and now accounts for nearly 17.5% of PGNX's total available float. At the security's average pace of trading, it would take about seven sessions to buy back these bearish bets.
Traders looking to speculate on PGNX's short-term trajectory should consider options. The equity's Schaeffer's Volatility Index (SVI) of 57% is in the 8th percentile of its annual range, suggesting near-term options are pricing in relatively low volatility expectations right now.
EXAS Options Attractive After Bear Gap
The shares of molecular diagnostics issue Exact Sciences gapped lower on Aug. 2, after the company's quarterly revenue fell short of estimates. Nevertheless, Canaccord Genuity analysts said that despite "confusion" during the earnings conference call, the stock's reaction was "overblown," and investors should "buy off the sharp sell-off."
EXAS, in fact, could be flashing "buy" after the dip. The stock is not only oversold, per Monday's 14-day Relative Strength Index (RSI) of 29, but it's back within one standard deviation of its 320-day moving average, after a notable stint north of the trendline. After the two prior signals of this kind, the security was higher one month later both times, boasting a massive average gain of 28.92%, per White. A similar jump from the stock's current perch at $50.07 would place Exact Sciences shares around $64.50.
As with Progenics, should EXAS once again skyrocket off trendline support, shorts could hit the bricks. Short interest represents more than 9% of the stock's total available float, or about seven sessions' worth of pent-up buying demand, at the equity's average trading volume.
Plus, EXAS' SVI of 39% is in the 7th percentile of its annual range, pointing to attractively priced short-term options, from a historical volatility standpoint. What's more, EXAS sports a Schaeffer's Volatility Scorecard (SVS) of 85, suggesting the equity has made bigger-than-expected moves on the charts in the past year, relative to what the options market priced in -- a boon for would-be premium buyers.