BALTIMORE ( Stockpickr) -- When it comes to catalysts for stocks to move, there's nothing quite like earnings season. Good earnings can send shares rallying double-digits. At the same time, a bad turnout in earnings data can shove shares down by a similar amount. It's that extra earnings-surprise-induced volatility that makes now such a perfect time for a short squeeze.
We're still in the early stages of earnings season (the "official" kickoff was last week), but the indications are good so far. Of the roughly 10% of the S&P 500 Index that's already reported, around 70% have posted positive earnings surprises. That suggests that Wall Street is underestimating average corporate earnings this quarter.
This week, we're looking to take advantage of mispricing in heavily shorted stocks ahead of their earnings releases. After all, the added buying pressure of good earnings adds significant spark to any potential short squeeze name.
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