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5 Stocks Poised to Pop on Positive Earnings

Ascena Retail Group

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My final earnings short-squeeze play today is specialty retailer of apparel for women and tween girls Ascena Retail Group (ASNA - Get Report), which is set to release numbers on Thursday after the market close. This is a national specialty retailer operating, through its wholly owned subsidiaries, the dressbarn, maurices, and Justice brands. Wall Street analysts, on average, expect Ascena Retail Group to report revenue of $786.70 million on earnings of 36 cents per share.

If you're looking for a specialty retailer stock that's been uptrending strong heading into its earnings report this week, then make sure to take a hard look at shares of Ascena Retail Group. This stock has ripped higher in 2012 with shares up over 27% to its current price of $18.92 a share, which is just a few points off its 52-week high of $22.62.

The current short interest as a percentage of the float for Ascena Retail Group sits at 6.4%. That means that out of the 122.02 million shares in the tradable float, 7.92 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.1%, or by about 792,000 shares.

From a technical perspective, ASNA is currently trading above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock recently ran into heavy selling resistance at around $22 to $22.62, and has since then dropped back below its 50-day moving average of $20.90 a share. That said, ASNA has recently found some buying support at around $18.99 to $18.91 a share on a closing basis. I say closing because during intraday trading on Tuesday ASNA hit $18.65 a share.

If you're in the bull camp on ASNA, I would wait until after its report and look for long-biased trades if this stock can manage to hold above $18.99 to $18.65 a share and then trade above some near-term overhead resistance at $19.54 a share with high-volume. Look for volume on that move that hits close to or above its three-month average volume of 2,021,520 shares. If we get that move, then I would look to add to any long positions once ASNA takes out its 50-day at $20.90 and then its 52-week high of $22.62 a share.

I would simply avoid ASNA or look for short-biased trades if after its report the stock takes out those near-term support levels at $18.99 to $18.65 a share with heavy volume. If we get that action, then this stock should easily re-test its 200-day moving average of $16.87 a share, or possibly trend much lower if the bears spark a big-time selloff post-earnings.

To see more potential earnings short squeeze plays, 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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