Northern Oil & Gas Inc (NYSE:NOG) stock reached a five-year high of $43.64 on September 5th but has since pulled back. However, there are indications that the stock may soon experience another upward momentum.
The stock is currently trading within one standard deviation of its 50-day moving average, marking the fifth occurrence in the past three years. Historical data analyzed by Schaeffer’s Senior Quantitative Analyst Rocky White indicates that in half of these instances, the stock showed a positive trend one month later, with an average return of 5.2%. Based on this pattern, a similar movement from NOG’s current price of $40.71 could potentially push the shares near its previous high of $43 in 2023.
Another reason to be optimistic about Northern Oil & Gas stock is the high put/call volume ratio. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the 50-day put/call volume ratio stands at 2.88, ranking in the 94th percentile of its annual range. An unwinding of options traders’ pessimism could contribute to a potential upward movement in the stock.
Additionally, the Schaeffer’s Volatility Index (SVI) for NOG is currently at 29%, which falls in the low 8th percentile of its annual range. This suggests that options traders are currently pricing in low volatility expectations, making it an opportune time to consider options trading for NOG.
Lastly, it is worth noting that short interest represents 9.8% of the stock’s available float. This means that if the stock experiences an uptick, it could lead to a short squeeze, where short sellers rush to cover their positions, potentially driving the stock price even higher.
Overall, with the stock’s historical trendline, low options volatility, and the possibility of a short squeeze, Northern Oil & Gas Inc stock seems to have potential for another bounce higher in the near future.
Definitions:
- 50-day moving average: A technical analysis tool that calculates the average price of a stock over the last 50 trading days.
- Standard deviation: A measure of the volatility or dispersion of a set of values from its mean.
- Put/call volume ratio: The ratio of the number of put options traded to the number of call options traded.
- Schaeffer’s Volatility Index (SVI): An index that reflects the level of implied volatility priced into options.
- Short interest: The total number of shares of a particular stock that have been sold short by investors.
- Short squeeze: A situation in which a heavily shorted stock moves sharply higher, forcing short sellers to buy back shares to cover their positions.
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