ECYT has been a long-term outperformer on the charts
Endocyte, Inc. (NASDAQ:ECYT) stock is up 1% at $17.71 in afternoon trading -- and if past is prologue, the biopharmaceutical concern could be headed even higher soon. Below we will dig deeper into the security's technical performance, and learn why now may be the perfect time to bet on ECYT's next leg higher.
ECYT has been in rally mode since touching its early February low of $2.81, so far adding 530%. The security touched a four-year high of $20.85 on Sept. 4, but has since pulled back to its 40-day moving average, which has been a "buy" signal in the past.
Endocyte stock is now within one standard deviation of its 40-day moving average. Over the past three years, there have been six prior instances of ECYT pulling back to this trendline after closing north of it at least 60% of the time during the previous two months and in eight of the last 10 trading days. Those prior pullbacks have resulted in an average one-month return of 14.85%, per data from Schaeffer's Senior Quantitative Analyst Rocky White, with 80% of those returns positive. A bounce of this magnitude would push Endocyte shares back above $20, within a chip-shot of a fresh multi-year peak.
Short interest on ECYT fell 26.7% during the past two reporting periods, but still represents nearly 13% of the stock's total available float. At the biopharma concern's average daily trading volume, it would take shorts about a week to buy back the rest of their bearish bets -- plenty of fuel for a short squeeze.
Meanwhile, the stock's Schaeffer's Volatility Index (SVI) of 62% ranks in the 2nd percentile of its annual range, which indicates short-term options are cheap, from a volatility perspective. Plus, ECYT sports a Schaeffer's Volatility Scorecard (SVS) of 92 out of 100, which shows the stock has tended to make larger-than-expected moves on the charts compared to what the options market had priced in. In other words, now may be an opportune time to speculate with near-term Endocyte options.