My first earnings short-squeeze candidate is Micron Technology (MU), which is set to report its results on Thursday after the market close. This company, together with its subsidiaries, engages in the manufacture and marketing of semiconductor devices worldwide. Wall Street analysts, on average, expect Micron Technology to report revenue of $2.14 billion on earnings of 2 cents per share.
If you're looking for a beaten-down stock in front of the quarter, then shares of Micron Technology should really fit the bill. This stock has been hammered lower during the past six months, with shares falling from a May high of $11 a share to its current price of just under $6.50 a share.>>3 Beaten-Down Giants Ready to Rebound The current short interest as a percentage of the float for Micron stands at 6.3%. That means that out of the 977.21 million shares in the tradable float, 61.8 million are sold short by the bears. This isn't a high short interest or a low float, but with over 60 million shares held short, it's more than enough to spark a solid short-covering rally if the bulls hear what they're looking for. From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. The stock recently put in a double bottom at around $5.20 a share and hit selling resistance at $7.42 a share. If you're bullish on this company, I would buy this stock after its report if it can break out above $6.77 a share on big volume. Look for volume that's tracking in close to or above its three-month average volume of 39.3 million shares. I would add aggressively to any long trade if the stock then takes out $7.42 a share on solid volume. I would target a run back towards $8.20 to $9 a share if the bulls spark a short-squeeze post-earnings. I would short this name after earnings only if the stock drops below some near-term support at $6.22 a share on big volume. I would add to any short bets if the stock then takes out $5.20 with volume. Bearish traders should target a fall towards $4.20 or possibly even lower if the bears smack this down post-earnings. Micron, one of the top holdings at David Tepper's Appaloosa Management, shows up on recent lists of 7 Tech Stocks With Limited Downside and 6 Stocks Under $7 With Upside.
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