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An earnings short-squeeze trade in the computer peripherals complex is
Synnex(SNX - Get Report), which is set to release numbers on Tuesday after the market close. This is a business process services company, servicing resellers, retailers and original equipment manufacturers, in multiple regions globally. Wall Street analysts, on average, expect Synnex to report revenue of $3.82 billion on earnings of $1.14 per share.
This company has the opportunity to beat Wall Street estimates for the fifth consecutive quarter if it can manage to report bullish results. Synnex's profit has trended higher year over year by an average of 15.6% over the past five quarters. This stock also just broke out above some near-term overhead resistance at $30.26.
The current short interest as a percentage of the float for Synnex is worth noting at 8%. That means that out of the 31.64 million shares in the tradable float, 1.99 shares are sold short by the bears. This is a notable short interest, so look for a big spike higher in this stock if Synnex can report solid results that please the bulls.
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From a technical standpoint, SNX is currently trading above both its 50-day and 200-day
moving averages, which is bullish. This stock has been uptrending very strong since it hit a low in August at $22.56 a share. During that uptrend, shares of SNX have been consistently making higher lows and higher highs, which is bullish price action. The stock now sets up to trigger a breakout trade if it can clear some past overhead resistance levels post-earnings.
If you're bullish on SNX, then I would look to be a buyer after they report earnings if the stock manages to break out above $32.06 and $33 a share with volume. Look for volume that registers near or above its three-month average action of 203,024 shares. If we get that move, I would target a run back towards $34.50 a share. I would then add to any high-volume move over $34.50 and look for a re-test of its
52-week high of $36.72 a share
I would avoid SNX from the long side if this stock fails to breakout post-earnings, and I would consider it a short candidate if it trades back below its recent
breakout level of $30.26 with volume. I would then add to any short positions if this stock takes out its 50-day of $29.45 and its 200-day of $29.32 with heavy volume. Target a drop back toward $28 to $27 a share, or possibly lower if the bears smack this stock down post-earnings.