Steel stock Cleveland-Cliffs Inc (NYSE:CLF) was last seen up 2.6% to trade at $12.35, brushing off a downgrade from KeyBanc to "sector weight" from "overweight." The security is recovering a portion of yesterday's sharp 9.3% slide, and could continue to rebound as the pullback has it coming into contact with a historically bullish trendline.
Per Schaeffer's Senior Quantitative Analyst Rocky White, CLF is within 0.75 of the 126-day moving average's 20-day average true range (ATR) after remaining above it 80% of the time throughout the past two weeks and 80% of the last 42 trading sessions. This signal has occurred eight other times over the past 10 years, after which the stock was higher one month later 75% of the time with an average 4.3% gain.
A short squeeze could provide tailwinds as well. Short interest represents 13.1% of the stock's available float, or almost three days' worth of pent-up buying power. Plus, CLF's 14-day relative strength index (RSI) of 28.1 sits in "oversold" territory, which typically precedes a short-term bounce.
