Buy the dip on quantum computing? Crazier things have been said.
Quantum computing stock IonQ (IONQ) was flying high in mid-October, hitting a record high of $84.64 on Oct. 13. The shares have suffered a nearly 30% drawdown since, as high-growth, speculation-heavy sectors are faced with valuation concerns and overbought conditions. Today, the quantum computing firm reported a third-quarter earnings miss. However, Q3 revenues were up year-over-year after the acquisitions of Oxford Ionics and Vector Atomic were completed, and 2025 guidance was raised. With IONQ up off the mat, last seen 3% higher at $56.91, the growth flush out could be finished, for now. And while investors can be skeptical of quantum computing technology’s long-term viability, they must also mind the stock testing a historically bullish moving average yesterday.
Per Schaeffer’s Senior Quantitative Analyst Rocky White, the equity yesterday was within 0.75 of the 80-day moving average’s 20-day average true range (ATR) after remaining above it 80% of the time during the last two weeks and 80% of the last 42 trading sessions. This signal has occurred nine other times over the past 10 years, after which the stock was higher one month later 63% of the time with an average 17.9% gain. A move of similar magnitude would erase IONQ’s 8% quarterly deficit.
It’s also worth noting that the IonQ stock has breached that 80-day trendline only five times on a closing basis since May. Per the chart, the shares’ 14-Day Relative Strength Index (RSI) has cooled off from its overbought levels. Plus, there’s still short covering potential. Short interest declined by 22.6% in the most recent reporting period, yet the 47.66 million shares sold short accounts for 14.2% of the stock’s total available float.
The security could benefit from an unwinding of pessimism in the options pits. This is per IONQ’s Schaeffer’s put/call open interest ratio (SOIR)of 1.51 that sits higher than 90% of readings from the past year.
Options are on the expensive side right now, with a Schaeffer’s Volatility Index (SVI) of 117% that sits in the 41st percentile of annual readings. However, with earnings out of the way, a post-earnings volatility crush could soon make premium more affordable for speculative traders.