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One earnings short-squeeze play in the retail apparel space is
Collective Brands(PSS), which is set to release numbers on Tuesday after the market close. This company is a producer of compelling lifestyle, fashion and performance brands for footwear and related accessories to consumers worldwide. Wall Street analysts, on average, expect Collective Brands to report revenue of $781.19 million on a loss of 82 cents per share.
This stock is off to a hot start in 2012 with shares up around 20%. Despite that strong start, shares of Collective Brands are still well off its 52-week high of $23.58 as we head towards its earnings report. That said, the stock is within range of triggering a near-term breakout post-earnings.
The current short interest as a percentage of the float for Collective Brands is extremely high at 25.1%. That means that out of the 55.24 million shares in the tradable float, 14.87 million are sold short by the bears. This stock has a massive short interest and a pretty low tradable float. Any good news could easily spark a big short squeeze if the bulls like what they hear.
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From a technical perspective, PSS is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently hit a bottom in November at $11.38 a share, and since then it has run-up towards its current price of $17.24 a share. During that sharp uptrend, the stock has made mostly higher lows and higher highs, which is bullish price action.
If you're bullish on PSS, I would look for long-biased trades after its report if the stock can manage to break out above some near-term overhead resistance at $18 to $18.61 a share with high-volume. Look for volume that registers close to or above its three-month average action of 1.65 million shares. If we get that action, I would target a run in PSS back toward its $23 to $24 a share, or possibly much higher.
I would simply avoid PSS or look for short-biased trades after its report if the stock fails to break out and then takes out some near-term support at $17.02 to $16.50 a share with volume. Target a drop back toward its 50-day moving average of $15.76 a share or its 200-day moving average of $14.31 a share, if the bears slam this stock post-earnings.