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TheStreet Open House

5 Heavily Shorted Stocks to Squeeze the Bears

Stock quotes in this article: CMTL, JBL, ATU, ZZ, SNX


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One final earnings short-squeeze play is Synnex (SNX), which is set to release numbers on Tuesday after the market close. This is a business process services company, servicing resellers, retailers and original equipment manufacturers, in multiple regions globally. Wall Street analysts, on average, expect Synnex to report revenue of $2.57 billion on earnings of 89 cents per share.

This company is on tap to beat Wall Street estimates for the fifth consecutive quarter if it can manage to report another solid one. Synnex's profits have risen year-over-year by an average of 17.5% over the past five quarters. Revenue has trended higher for the past three straight quarters.

The current short interest as a percentage of the float for Synnex is a notable 6.9%. That means that out of the 31.43 million shares in the tradable float, 1.72 million are sold short by the bears. It's worth noting that the bears have also increased their bets from the last reporting period by 13.6%, or about 205,000 shares.

From a technical standpoint, the stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock dropped sharply from its May high of $34.48 to a recent low of $22.56 a share. That said, the stock has started to form a sideways basing pattern between $23 and $26.70 a share. This shows the downtrend could be over for now if the bottom of the basing pattern holds as support.

I would look to be a buyer of this stock after it releases its results if the stock can break out above $26.70 a share on big volume. Look for volume that's tracking in close to or greater than its three-month average action of 232,400 shares. I would target a run back toward its 200-day moving average of $31.07 a share or possibly higher if the bulls spark a solid short-squeeze.

I would short this name after earnings only if the stock drops below $22.56 a share on heavy volume. I would target a drop back towards $20 to $17 shares if the bears push this name lower post-earnings.

To see more potential earnings short squeeze candidates, including Darden Restaurants (DRI), Neogen (NEOG) and Omnova Solutions (OMN), check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to and maintains the website, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
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