Buy the Dip on This Quantum Computing Stock

Rigetti Computing (RGTI) is testing its 50-day moving average, a historically bullish signal that has preceded gains in two-thirds of prior instances, averaging 4.4% one month later. Despite a 25% year-to-date decline, the stock's pullback coincides with an RSI nearing oversold territory and a high short interest of 19.3% of the float, suggesting potential for a short-term rebound.

Analysis

Rigetti Computing (RGTI) has experienced a significant pullback, declining 25% year-to-date and 5.3% in June, following an extraordinary 1,070% gain over the preceding 12 months. This retracement has brought the stock to test its 50-day moving average, a technical level that, according to Schaeffer's Senior Quantitative Analyst Rocky White, has historically signaled bullish outcomes under specific conditions. Out of three similar instances in the past three years where RGTI pulled back to this moving average after spending at least 80% of the last 10 days and 80% of the last two months above it, the stock was higher one month later on two occasions, averaging a 4.4% gain. This 50-day trendline also notably served as resistance prior to a couple of months ago, suggesting its current test as support is significant. Further bolstering the potential for a near-term rebound, RGTI's 14-Day Relative Strength Index (RSI) is at 30, indicating it is on the cusp of "oversold" territory. Additionally, while short interest has decreased by 16% in the two most recent reporting periods, the 55.28 million shares sold short still account for a substantial 19.3% of the stock's total available float, suggesting that an unwinding of these bearish positions could provide upward price momentum.

Key Decisions for Investors

• Investors should consider the test of the 50-day moving average as a potentially bullish technical signal, given its historical precedent for RGTI with a 4.4% average one-month gain in two of three past instances.
• Monitor RGTI's 14-Day RSI, currently at 30; a move out of 'oversold' territory could indicate a short-term upward price movement.
• The high short interest of 19.3% of the float presents a potential for a short squeeze, which could amplify any positive price catalysts or technical rebound.
• Given the stock's recent volatility and the mixed historical success of the specific moving average signal (positive in two of three cases), a cautious approach with defined risk parameters is advisable for any new positions.