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My first earnings short-squeeze play today is semiconductor player
OmniVision Technologies(OVTI), which is set to release its numbers on Thursday after the market close. This company designs, develops and markets semiconductor image-sensor devices. Wall Street analysts, on average, expect OmniVision Technologies to report revenue of $205.34 million on earnings of 22 cents per share.
If you're looking for a beaten-down heavily shorted technology stock ahead of its earnings report this week, then make sure to take a hard look at shares of OmniVision Technologies. This stock has dropped notably from its April high of $21.11 to its closing price on Tuesday of $15.40 a share. That slide has pushed shares of OmniVision Technologies into oversold territory since its relative strength index reading has dipped around 30 to 40 for the last couple of weeks.
The current short interest as a percentage of the float OmniVision Technologies is rather high at 15.8%. That means that out of the 46.47 million shares in the tradable float, 8.18 million shares are sold short by the bears. This is a low float and high short-interest situation, so if the company can report bullish earnings and forward guidance, then we could easily see a sizable short squeeze post-earnings.
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technical perspective, OVTI is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending since April, with shares falling from $21.11 to a recent low of $14.02 a share. During that downtrend, shares of OVTI have consistently made lower highs and lower lows, which is bearish technical price action. That said, on Monday OVTI closed up 8.5% to $15.40 on heavy volume.
If you're in the bull camp on OVTI, I would wait until after its report and look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $15.72, and then its 200-day moving average of $16.26 a share with high-volume. Look for volume on that move that registers near or above its three-month average action of 2,591,920 shares. If we get that action, I would then add to any long positions once OVTI takes out its 50-day moving average of $18.16 a share with high-volume. Target a run toward $20 to $21 a share or possibly higher if the bulls spark a big short-squeeze post-earnings.
I would simply avoid OVTI or look for short-biased trades if after earnings this stock fails to trade back above its 50-day moving average at $16.26, and then drops below some near-term support at $14.02 a share with heavy volume. If we get that move, then look for OVTI to drop significantly down towards $12 to $11 a share if the bears hammer this down post-earnings.