Cleveland-Cliffs could continue its climb off its March lows
Shares of Cleveland-Cliffs Inc (NYSE:CLF) are trading 4.5% lower at $10.64, continuing a choppy pattern up the charts after bouncing off their mid-March lows and enjoying an upbeat first-quarter report. Despite yesterday tapping its highest mark in eight weeks, the steel name sports a nearly 20% year-to-date deficit. A bullish signal is now flashing, however, suggesting a surge could be on the way for CLF.
The trendline in question is the stock's 80-day moving average. Per Schaeffer's Senior Quantitative Analyst Rocky White, this “crossover” event has happened 17 times in the last 10 years, after which CLF was higher one month later 71% of the time, averaging a gain of 5.3%. From its current perch, a similar move higher would put the shares back near their February highs.
The stock is also ripe for a squeeze. Shorts have been piling on, with short interest up 16.5% in the past two reporting periods, now accounting for 14.9% of the stock's available float. At CLF's average pace of trading, it would take shorts nearly five days to buy back these bets.
The stock's Schaeffer's Volatility Scorecard (SVS) comes in at 83 out of 100. In other words, the shares have consistently realized higher volatility than its options have priced in over the past 12 months.