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Another earnings short-squeeze play in the retail apparel complex is national specialty retailer
Chico's FAS(CHS - Get Report), which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Chico's FAS to report revenue of $548.89 million on earnings of 20 cents per share.
This company beat Wall Street estimates last quarter by 1 cent, so market players will be looking for another beat for this quarter. Chico's FAS' profits have trended higher year-over-year by an average of 29.3% over the last five quarters. Revenue has also trended higher for three consecutive quarters.
The current short interest as a percentage of the float for Chico's FAS sits at 5.8%. That means that out of the 168.94 million shares in the tradable float, 9.88 million are sold short by the bears. The short-sellers have also been increasing their bets from the last reporting period by 19.6%, or by about 1.61 million shares.
>>Stocks Rising on Unusual Volume
From a technical standpoint, this stock is currently trading below its 50-day and 200-day moving averages, which is bearish. This stock was hammered by the sellers from its July high of $16.44 to a recent low of $10.52. That sharp selloff could setup a nice earnings-related pop in the stock if the sellers are done dumping shares. That pop started on Monday with the stock finishing up 2.3% on heavy volume to $11.61.
The way I would play this name would be to wait until after it reports its earnings and buy the stock if it trades back above its 50-day at $12.27 on high volume. Look for volume that's tracking in close to or above its three-month average action of 2,949,980 shares. I would then add to any long position once the stock moves above some overhead resistance at $13.15 and the 200-day at $13.67 on heavy volume. Target a run back towards $14 to $15 a share if the bulls can set off a short-squeeze.
I would consider shorting this stock after earnings only if it drops below some major near-term support at $10.50 a share on high-volume. If $10.50 is taken out post-earnings, then I would look for this stock to re-test the next significant support level at $8.10 a share.