Several Reasons to Target Marathon Digital Stock

MARA has pulled back to its historically bullish 50-day moving average

Thanks to the Bitcoin (BTC) renaissanceMarathon Digital Holdings Inc (NASDAQ: MARA) closed the book on 2023 with an emphatic two-year high of $31.30 on Dec. 27.  However, over the last 30 days, MARA has shed more than 22%, and was last seen 2.4% lower at $16.84, moving in tandem with BTC — down 2.1% this afternoon as well. The silver lining: this recent pullback has placed the stock near historically bullish trendline, if past is precedent.

 

More specifically, Marathon Digital stock just ran into its 50-day moving average, after trading above it since mid-November. According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, seven similar signals occurred during the past three years. MARA averaged a 15.4% return in 57% of said instances. A similar move from its current perch would put the security at around $19.43, roughly halving its 30.9% year-to-date deficit. 

MARA Chart January 182024

It’s also worth noting that the MARA’s Relative Strength Index (RSI) of 32 is on the cusp of “oversold” territory, indicating a short-term bounce could be in the cards. What’s more, short interest is down 8.4% over the last month, yet the 45.84 million shares sold short account for 21.2% of the stock’s total available float.

Despite a 137.5% year-over-year lead just two covering brokerages recommend a “strong buy,” while the remaining seven rate the equity a “hold” or worse. Before the open yesterday, BTIG raised its rating on Marathon Digital stock to “buy” from “neutral.” and a further unwinding of analysts’ pessimism could provide additional tailwinds.

A change of sentiment in the options pits could also fuel gains. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OM X PHLX (PHLX), MARA’s 10-day put call ratio of 0.74 ranks in the 95th percentile of annual readings. Echoing this, the security’s Schaeffer’s put/call open interest ratio (SOIR) of 0.83 stands in the slightly elevated 73rd percentile of reading from the past 12 months. All of this to say, puts have been extremely popular of late.

The stock’s Schaeffer’s Volatility Index (SVI) of 122% stands in the relatively low 33rd percentile of its annual range, as well, implying that options players are pricing in lower-than-usual volatility expectations than usual at the moment. Furthermore, the security’s Schaeffer’s Volatility Scorecard (SVS) sits at a 73 out of 100, meaning MARA tended these volatility expectations during the past year.

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