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5 Earnings Short-Squeeze Trades

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G-III Apparel Group

My first earnings short-squeeze candidate is apparel player G-III Apparel Group (GIII - Get Report), which is set to release its numbers on Tuesday before the market open. This company designs, manufactures and markets women's and men's apparel primarily in the U.S. Wall Street analysts, on average, expect G-III Apparel Group to report revenue of $213.39 million on a loss of 4 cents per share.

The current short interest as a percentage of the float for G-III Apparel Group is rather high at 13.1%. That means that out of the 15.95 million shares in the tradable float, 2.09 million shares are sold short by the bears. This is a high short-interest on a stock with a very low float. If G-III Apparel Group can deliver what the bulls are looking for, then this stock could experience a sizable short-squeeze post-earnings.

From a technical perspective, GIII is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last two months, with shares falling from a high of $29.62 to a recent low of $23.28 a share. During that downtrend, shares of GIII have mostly made lower highs and lower lows, which is bearish technical price action.

If you're in the bull camp on GIII, I would wait until after they report. Look for long-biased trades if this stock can manage to move back above its 200-day moving average of $24.78 a share with high-volume. Look for volume on that move that hits near or above its three-month average action of 218,078 shares. If we get that action, then add to any long positions once GIII takes out some near-term overhead resistance at $25.48 and then it 50-day moving average of $26.49 a share.

I would simply avoid GIII or look for short-biased trades if after earnings this stock fails to trade back above its 200-day at $24.78, and then drops below some near-term support at $23.28 a share with heavy volume. If we get that move, then look for GIII to trend down toward $21.21 a share or much lower if the bears hammer this stock post-earnings.
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