Bull Signal Suggests Even More Upside for Red-Hot RIOT

A pullback to its 40-day moving average could launch RIOT much higher

Deputy Editor
Apr 5, 2021 at 2:49 PM
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Riot Blockchain Inc (NASDAQ:RIOT) is on fire this afternoon, the equity has added 9% to trade at $56.79 so far today, extending it's impressive March climb, in which it added 21.8% for the month. The security is still a ways from its Feb. 17, 10-year peak of $79.50, with pressure near the $65 mark keeping a lid on shares last month. There's reason to believe, though, that RIOT could extend today's positive price action, making the security a solid growth pick for April. 

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the crypto stock just pulled back to its 40-day moving average after a lengthy period above the trendline. Similar pullbacks to this trendline have occurred five times over the past three years. One month after 75% of these signals, RIOT was higher, going on to average an impressive 21-day return of 52.5%. Needless to say, a similar return would put the equity well past its February peak, all the way above the $86 mark, which is home to levels RIOT hasn't touched since 2011. 

RIOT Aprl 5

RIOT's recent bounce could have shorts changing their tune, too, and an exodus of these bears could put even more wind at the stock's back. Short interest rose 24.6% in the last two reporting periods, and now makes up an eyebrow-raising 59.7% of the equity's available float. 

Some of the bearishness in the options pits could unwind and push RIOT higher as well. At the Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Riot Blockchain stock sports a 50-day put/call volume ratio that sits higher than 74% of readings from the past year. 

In this same vein, options look like the way to go. The stock's Schaeffer's Volatility Index (SVI) of 123% sits in the 8th percentile of its annual range, meaning option traders have rarely priced in lower volatility expectations during the past year. Plus, RIOT's Schaeffer's Volatility Scorecard (SVS) ranks at a 99 out of a possible 100, implying the stock has tended to exceed these expectations over the past 12 months -- a good thing for option buyers. 

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