One potential earnings short-squeeze trade in the apparel complex Cherokee (CHKE - Get Report), which is set to report results on Thursday after the market close. There are currently no analysts' estimates available for Cherokee.
The current short interest as a percentage of the float for Cherokee is decent at 9%. That means that out of the 7.07 million shares in the tradable float, 683,540 shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.3%, or by about 121,000 shares.From a technical perspective, CHKE is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock hit a recent low in late January at $9.97, and since then has run-up towards its current price of just over $12.50 a share. That move has now pushed CHKE within range of triggering a breakout trade post-earnings if the company can deliver what the bulls are looking for. >>5 Technical Trades From Your Twitter Feed If you're bullish on CHKE, I would wait until after they report and look for long biased trades if the stock breaks out above some overhead resistance at $12.94 to $13.07 a share with high-volume. Look for volume on that move that's near or above its three-month average volume of 48,737 shares. If we get that action, then look for CHKE to make a run at $14 to $16 a share. I would simply avoid CHKE or look for short biased trades if after earnings that breakout never triggers, and the stock drops back below its 200-day at $12.59 a share with heavy volume. If we get that move, look for CHKE to drop back towards its 50-day moving average of $11.28 or possibly lower if the bears spark a notable selloff post-earnings.