HALO flashed a similar signal back in October before gapping higher
The shares of Halozyme Therapeutics, Inc. (NASDAQ:HALO) are up 3.6% to trade at $32.77 at last check, after earlier hitting an all-time high of $33.23. And while the biotech stock already enjoys an impressive 93% year-over-year lead -- with consistent support from the 120-day moving average over the past several months -- a historic bullish signal now flashing suggests more upside may be in the cards for HALO in the near future.
More 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 the stock 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 HALO's current SVI of 47%, which sits just below the 13th percentile of its 12-month range. Data shows the stock was higher a month later, averaging a return of 9.4% for that time period, with both of the returns positive, including a similar signal last month. From its current perch, a move of similar magnitude would put HALO just shy of the $36 mark, more uncharted territory.
Similar to a few weeks ago, a short squeeze could create even more tailwinds for the security. The 14.98 million shares sold short now make up 11.4% of the stock's available float. In simpler terms, it would take just about two weeks to buy back these bearish bets, at HALO's average pace of daily trading.
An unwinding of pessimism in the options pits could also push Halozyme Therapeutics stock higher. This is per the security's Schaeffer's put/call open interest ratio (SOIR) of 0.75, which sits higher than 88% of readings from the past year. This suggests short-term option traders have rarely been more put-biased. And while this ratio is lower from our October signal, its high percentile suggests there is still more pessimism to be unwound.