CLF Stock Nears Bullish Trendline Ahead of Earnings

Short interest has seen a notable surge over the past two reporting periods

Managing Editor
Oct 18, 2018 at 12:24 PM
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Mining stock Cleveland-Cliffs Inc (NYSE:CLF) is down 4.8% at $11.27 in afternoon trading, though a specific catalyst remains unclear. Regardless, CLF has been a climber on the charts, and below we will take a look at what the options market has priced in for the stock's third-quarter, post-earnings move; the company is scheduled to report before the market opens tomorrow, Oct. 19.

CLF has more than doubled since its mid-November bottom of $5.60, and at last check was up 59% year-to-date. Recent pullbacks have been contained by the rising 40-day moving average, a trendline that helped pushed the shares to its late-September peak, and holds historically bullish implications for the stock.

Daily Chart of CLF with 40MA

Digging into its earnings history, CLF has closed higher the day after reporting in just three of the last eight quarters. However, the stock saw a lift in the past two, including a 12.7% surge in July. Looking broader, the shares have averaged a 10.1% move the day after earnings over the last two years, regardless of direction. This time around, options traders are pricing in a larger-than-usual 13% swing for Friday's trading.

Wrapping up, short interest on the security climbed 10.5% during the past two reporting periods, and now represents a healthy 15.7% of the stock's total available float. At the average pace of trading on the equity, it would take shorts less than a week to buy back their bearish bets.
 

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