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5 Earnings Stocks Poised to Pop

Stocks in this article: SIRI STMP NUAN DNKN AMKR

Amkor Technology

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Another earnings short-squeeze trade is semiconductor player Amkor Technology (AMKR), which is set to release numbers on Thursday after the market close. This company is a provider of outsourced semiconductor packaging (assembly) and test services. Wall Street analysts, on average, expect Amkor Technology to report revenue of $686.36 million on earnings of 7 cents per share.

Revenue has trended down for Amkor in the past two quarters. During the third quarter, revenue came in at $740 million, or 6.8% lower than a year-ago. IN the quarter before that, revenue dropped 8.2%. The current short interest as a percentage of the float for Amkor Technology is very high at 14.8%. That means that out of the 82.84 million shares in the tradable float, 13.17 million shares are sold short by the bears.

From a technical perspective, AMKR is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock formed a double bottom last December at $4.06 to $4.07 a share. After marking that bottom, the stock skyrocketed towards its current price of $5.99 a share. Now the stock is within range of a near-term breakout if the company can report solid earnings and bullish guidance.

If you're bullish on AMKR, I would wait until after it reports earnings and buy the stock if it breaks out above $6.15 a share with high-volume. Look for volume that's tracking in close to or above its three-month average volume of 1,457,920 shares. If we get that action, I would then add to any long positions once AMKR takes out more overhead resistance at $6.59 a share. Target a run towards $7 to $7.50 if the bulls gain control of this stock post-earnings.

I would simply avoid any long trades or look to short AMKR if the stock fails to break out above $6.15 post-earnings. Target a drop back towards the 200-day moving average of $5.18 a share, if some near-term support at $5.60 gets taken out with heavy volume.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
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