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Another earnings short-squeeze candidate is
Blue Nile(NILE - Get Report), which is set to release numbers on Wednesday after the close. This is an online retailer of diamonds and fine jewelry. Wall Street analysts, on average, expect Blue Nile to report revenue of $123.17 million on earnings of 42 cents per share.
This company has lacked consistency in regards to its earnings, bouncing between beating and missing Wall Street estimates during the past fiscal year. Blue Nile's income has trended lower year-over-year by an average of 4.1% over the past five quarters. Its revenue has trended higher for three straight quarters. The stock is trading well off its 52-week high of $59.14 as we approach its quarter earnings report his week.
The current short interest as a percentage of the float for Blue Nile is very large at 34.2%. That means that out of the 13.36 million shares in the tradable float, 4.57 million shares are sold short by the bears. This stock has an extremely low float and monster short interest. If Blue Nile can report bullish earnings and forward guidance, then a large short squeeze could follow.
From a technical perspective, NILE is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong since it bottomed at $30.34 in November. During that uptrend, shares of NILE have been mostly making higher lows and higher highs, which is bullish price action. The stock just recently broke out above some near-term overhead resistance $42.23 a share.
If you're bullish on NILE, I would wait until after they report earnings and only look for long biased trades if the stock manages to hold above that breakout level of $42.32. If the stock can manage to hold above that level, then it has a good chance to short-squeeze back towards $50 a share. Look for upside volume if that level holds that comes in near or above its three-month average action of 255,761 shares.
I would only look for short biased trades or avoid NILE after earnings if it trades back below that breakout level of $42.23 a share on high-volume. If we see that action, I would target a drop back below both its 200-day moving average of $40.94 and 50-day of $39.49. One possibly target zone is $38 to $37 a share if the bears hammer this below those key moving averages post-earnings.
Blue Nile, one of TheStreet Ratings'
top-rated online retail stocks, shows up on a list of
6 Retailers Banking on a New CEO in 2012.