5 Stocks Set to Soar off Bullish Earnings

Mad Catz Interactive

One earnings short-squeeze play in computer peripherals complex video game accessories maker Mad Catz Interactive (MCZ), which is set to release numbers on Wednesday after the market close. There are currently no analysts' estimates available for Mad Catz.

This stock is setting up for a big breakout if the company can manage to report a better quarter than its first quarter's weaker-than-expected earnings due to slowing demand. Revenue for the first-quarter dropped 17.3% to $16.5 million from $19.9 million a year ago. Sales dropped off due to weak demand from Europe and the termination of a third-part distribution agreement.

The current short interest as a percentage of the float for Mad Catz is notable at 3.8%. That means that out of the 61.52 million shares in the tradable float, 2.33 million are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a solid short-squeeze off any bullish results.

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From a technical standpoint, this stock is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock plunged from its July high of $1.63 a share to a recent low of 55 cents to 54 cents a share. After hitting that low, the stock formed a double bottom at 55 cents to 54 cents and now sets up to breakout off any bullish earnings.

The way I would play this name would be to wait until after its report and buy the stock if it breaks out above 90 cents to $1.04 a share on heavy volume. Look for volume that's tracking in close to or above its three-month average action of 652,900 shares. If those levels are taken out, I would then add to any long position once $1.10 to $1.11 are breached with volume. Target a run back towards the 200-day moving average of $1.33 if the bulls gain full control if this stock post-earnings.

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