One earnings short-squeeze play in the software and programming complex is Adobe Systems (ADBE), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Adobe Systems to report revenue of $1.09 billion on earnings of 60 cents per share.
This company matched Wall Street estimates last quarter after missing forecasts in the prior two quarters. Revenue had trended higher for Adobe for the past four quarters. Revenue went up 8.5% in the second quarter, 19.7% in the first quarter and 33.1% in the four quarter.The current short interest as a percentage of the float for Adobe Systems stands at 3.7%. That means that out of the 488.63 million shares in the tradable float, 17.82 million are sold short by the bears. This isn't a huge short interest, but it's more than enough to spike the stock higher if Adobe can report bullish earnings and guidance. From a technical standpoint, ADBE is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has just started to break below its 50-day moving average of $27.41 a share, since the stock is currently trading at $26.56. The nearest support level on the stock now sits at $26 to $25.72 a share. If you're looking to get long ADBE for an earning short-squeeze play, then I would look to be a buyer after it reports its results if the stock can manage to trade back above its 50-day moving average of $27.41 on heavy volume. Look for volume on a move back above that level that registers near or above its three-month average action of about 7 million shares. If we get that move, I would then add to any long positions on a high volume move over $28.18 and above $29.55 (200-day). I would avoid ADBE or get short this stock after it reports earnings if the stock takes out that key support level at $25.72 on strong volume. A high-volume move below that level should set this stock up to re-test $23 a share, or possibly much lower if the bears hammer this down post-earnings. Adobe, one of Jim Cramer's Stocks to Watch this week, is a new position in Tiger Global Management's portfolio as of the most recently reported quarter.
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