5 Stocks Set to Soar off Bullish Earnings

Herman Miller

One more earnings short-squeeze candidate is furniture and fixtures player Herman Miller (MLHR), which is set to release numbers on Wednesday after the market close. This company engages in the research, design, manufacture, and distribution of interior furniture systems, products, and related services worldwide. Wall Street analysts, on average, expect Herman Miller to report revenue of $409.63 million on earnings of 27 cents per share.

This company reported in-line earnings last quarter, so traders will be looking for a better showing during this quarter. Herman Miller's profit has trended higher year-over-year by an average of more than threefold over the past five quarters. Revenue has risen for three straight quarters.

The current short interest as a percentage of the float for Herman Miller sits at 4.6%. That means that out of the 57.34 million shares in the tradable float, 2.60 million are sold short by the bears. This isn't a huge short interest, but it's more than enough to spike the stock off any bullish news.

From a technical perspective, MLHR is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock formed a double bottom in January at $17.99 a share. Since putting in that bottoming pattern, the stock has soared towards its current price of just under $22 a share. This move now puts the stock within range of triggering a near-term breakout trade post-earnings.

If you're bullish on MLHR, I would look for long-biased trades after its report if the stock can manage to break out above $23.04 to $23.50 a share high-volume. Look for volume that registers close to or above its three-month average action of 389,285 shares. If we get that action, I would target a run in MLHR back towards its next significant overhead resistance level at $27 a share.

I would simply avoid MLHR or look for short-biased trades after its report if the stock fails to break out and then drops below some near-term support at $20.28 a share with high volume. Target a drop back towards $19 to $18 a share or possibly even lower if the bears sell this stock off post-earnings.

To see more potential earnings short squeeze plays, including Fred's (FRED), NuPathe (PATH) and AAR (AIR), 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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