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Another earnings short-squeeze candidate is
Affymax(AFFY), which is set to release numbers on Wednesday after the market close. This is a biopharmaceutical company developing drugs to improve the treatment of serious and often life-threatening conditions.
Recently, Citi Investment Research said that there is rising interest among dialysis clinics about its anemia treatment, which is being reviewed by regulators. As we approach its earnings report, this stock is trending very strong and trading about one point off its 52-week high of $11.50.
The current short interest as a percentage of the float for Affymax is notable at 9.1%. That means that out of the 30.36 million shares in the tradable float, 3.16 million shares are sold short by the bears. This is a decent short interest for a stock with a very low float. Any good news could easily spark a sizable short-squeeze.
From a technical perspective, AFFY is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been basing, or trading sideways for the past few months between $11.50 and around $10 a share. A move outside of that sideways pattern should set this stock up for its next big trend.
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If you're bullish on AFFY, I would look for long-biased trades after its earnings report if the stock manages to break out above $11.50 a share with high-volume. Look for volume on that move that's close to or well above its three-month average action of 1,249,940 shares. If we get that high-volume breakout, then look for AFFY to spike large since it will enter a major gap down zone from back in 2010.
I would avoid AFFY or look for short-biased trades if after earnings the stock fails to break out and then drops below some near-term support at $10 a share with volume. I would target a drop back towards its 50-day moving average of $8.99 or possibly lower if the bears hammer this post-earnings.