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Another potential earnings short-squeeze trade is
Tesla Motors(TSLA - Get Report), which is set to report results on Wednesday after the market close. This company designs, develops, manufactures and sells electric vehicles and advanced electric vehicle powertrain components. Wall Street analysts, on average, expect Tesla Motors to report revenue of $38.45 million on a loss of 63 cents per share.
During the last quarter, Tesla reported a net loss of 63 cents per share vs. Wall Street estimates of a loss of 66 cents per share, beating estimates after coming up short in the previous quarter. Their revenue has trended higher for three straight quarters. This stock is trading around three points off its
52-week high of $35 a share as we head into its quarterly report.
The current short interest as a percentage of the float for Tesla Motors is huge at 53.3%. That means that out of the 62.79 million shares in the tradable float, 25.17 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 3%, or by about 720,700 shares.
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From a technical perspective, TSLA is currently trading above its 50-day and 200-day
moving averages, which is bullish. This stock plunged from its December high of $35 towards its recent low of $22.64 a share. After hitting that low, the stock has rebounded sharply towards its current price of just under $32 a share. The stock is now within range of triggering a breakout post-earnings if the bulls get the news they're looking for.
If you're bullish on TSLA, I would wait until after they report its results and look for long-biased trades once it
breaks out above $32.90 a share on strong volume. Look for volume that's tracking in close to or above its three-month average action of 1,068,200 shares. If we get that high-volume breakout, then I would look for TSLA to make run at its 52-week high of $35 to its all-time high of $36.42 a share.
I would simply avoid any long trades in TSLA or look for short-biased trades if this stock fails to breakout post-earnings, and then drops below some near-term support at $31 to $30 a share with volume. If we get that action, I would then add to any short positions once it takes out its 50-day at $29.21 a share with volume. Target a drop back below its 200-day at $27.97 a share if the bears whack this stock down post-earnings.