Buy the Dip on This Pharma Stock

The stock just pulled back to a trendline with bullish implications

Few stocks have had as rough a start to February as Innoviva Inc (NASDAQ:INVA). The pharma name shed 17.3% last week alone, and has extended those struggles to this week. However, this pullback, if history is any guide, could present a buying opportunity for INVA bulls.

More specifically, Innoviva stock is now trading within one standard deviation of its 320-day moving average. The last nine times INVA pulled back to this moving average after a lengthy stretch above it, the equity was up 4.9%, on average, one month out, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

At last check, Innoviva stock was up 1.9% to trade at $15.67, erasing early post-earnings losses. The stock is also shrugging off a price-target cut to $22 from $23 at Berenberg. What's more, INVA's 14-day Relative Strength Index (RSI) was docked at 27 at Wednesday'sclosing bell -- well into oversold territory, leaving the security well-positioned to bounce in the short term.

For a stock that nabbed a three-year high of $20.54 as recently as Jan. 30, INVA is represented well among short sellers. The 17.97 million shares sold short is the most since April 2017, and represents a whopping 27% of the equity's total available float. Should the security start to climb again, it would take shorts nearly 16 days to buy back their bearish bets, at INVA's average daily trading volume.