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A potential earnings short-squeeze trade in the broadcasting and cable TV complex is
LodgeNet Interactive(LNET), which is set to release numbers on Tuesday after the market close. This company is the provider of interactive media and connectivity solutions to the hospitality industry in the U.S., Canada and Mexico. There are currently no Wall Street estimates for LodgeNet Interactive.
If you're looking for a heavily shorted small-cap stock that's trading within range of a major breakout ahead of its earnings report, then make sure to check out shares of LodgeNet Interactive. This stock has been uptrending strong so far in 2012 with shares up around 60%, and the stock is just 30 cents off its 52-week high of $4.09 a share.
The current short interest as a percentage of the float for LodgeNet Interactive is extremely high at 31.3%. That means that out of the 14.01 million shares in the tradable float, 6.59 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 26.9%, or by about 1.39 million shares. If the bears are caught pressing too strong into this quarter, then this stock could see a short-covering rally of epic proportions.
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From a technical perspective, LNET is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending strong for the last six months, with shares soaring from a low of $1.89 to a recent high of $4.09 a share. That bullish trend higher has now pushed LNET within range of triggering a major breakout trade post-earnings.
If you're a bull on LNET, I would wait until after its report and look for long-biased trades if this stock can manage to break out above $3.91 to $4.09 a share with high volume. Look for volume on that move that's near or well above its three-month average action of 149,619 shares. If we get that action, look for LNET to make a run at $5 a share or possibly higher if the bulls gain full control of this stock post-earnings.
I would simply avoid any long-biased trades in LNET post-earnings if the breakout fails to trigger with high-volume.