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An earnings short-squeeze trade candidate is software and programming player
Synchronoss Technologies(SNCR - Get Report), which is set to release numbers on Tuesday after the market close. This company is a provider of multi-channel transaction management solutions to the communications services and digital content marketplaces. Wall Street analysts, on average, expect Synchronoss Technologies to report revenue of $61.55 million on earnings of 23 cents per share.
During the last quarter, this company improved gross margins by 4.8% and revenue rose 33.3%, while its costs of sales rose by 20.9% to $27.8 million. Overall, it met Wall Street estimates, so market players will be looking for beat this quarter.
The current short interest as a percentage of the float for Synchronoss Technologies is extremely high at 18.7%. That means that out of the 23.74 million shares in the tradable float, 5.22 million are sold short by the bears. This is a very high short interest and low float situation that can spark a giant short-squeeze if the company can deliver what he bulls are looking for.
From a technical perspective, SNCR is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock found big buying
support a few months ago at around $27 to $27.58 a share, and since then it has soared to its current price of $34 a share. This monster uptrend puts SNCR within range of a major breakout post-earnings if the company can deliver strong earnings and bullish guidance.
If you're bullish on SNCR, wait until after earnings and buy the stock once it takes out $35.72 to $35.90 with high-volume. Look for volume that's tracking in close to or above its three-month average volume of 308,102 shares. If we get that action, I would look for SNCR to challenge its 2007 highs near the low-to-mid-$40s.
I would avoid any long trades or short SNCR after earnings if the stock fails to break out and then drops below some near-term support at $33 a share on heavy volume. I would target a drop back towards its 50-day moving average of $30.86 a share, or possibly much lower if the bears hammer this stock down post-earnings.
Synchronoss is one of
Goldman Sach's Top Tech Stocks for 2012.