Energy Stock Primed for a Rally

NOG's 320-day moving average has been a consistent bull signal over the past 3 years

Deputy Editor

May 11, 2023 at 2:04 PM

Northern Oil & Gas Inc (NYSE:NOG) stock has been steadily moving lower on the charts since its mid-April highs, even in spite of last week's first-quarter earnings and revenue beat. However, there is reason to believe the stock could soon stage a bounce, as it has just run into a trendline with historically bullish implications.

NOG is trading within one standard deviation of its 320-day moving average for the fourth time in the past three years. According to Schaeffer's Senior Quantitative Analyst Rocky White, NOG was positive one month later after each of these signals, averaging an impressive 22.1% return. A similar move from the stock's current perch at $31.19 would push the equity to the $38 level -- home to its June and November 2022 peaks.

NOG May11

It's also worth noting that short interest represents 15.9% of the stock's available float. It would take shorts over eight days to cover their bets, leaving plenty of pent-up buying power.

Now looks like a good time to weigh in on NOG with options, too, per its Schaeffer's Volatility Index (SVI) of 44%, which ranks in the low 5th percentile of its annual range. This means options traders are pricing in low volatility expectations at the moment.

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