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One potential earnings short-squeeze trade in the computer services complex is
FactSet Research Systems(FDS - Get Report), which is set to release numbers on Tuesday before the market open. This company is a provider of integrated financial information and analytical applications to the global investment community. Wall Street analysts, on average, expect FactSet Research Systems to report revenue of $202.95 million on earnings of $1.04 per share.
This company is looking to beat Wall Street estimates for the third straight quarter. Last quarter, it report a profit of $1.05 per share vs. Wall Street estimates of $1 per share, and the quarter before, the company topped estimates by 2 cents with a profit of $1.02 per share vs. estimates of $1 per share.
The current short interest as a percentage of the float for FactSet Research Systems stands at 7.8%. That means that out of the 41.34 million shares in the tradable float, 3.22 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to trigger a sizeable short-squeeze post-earnings if FactSet Research Systems can deliver the news the bulls are looking for.
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From a technical perspective, FDS is currently trading above both its 50-day and 200-day moving averages, which bullish. This stock has been uptrending strong since it broke out in March with heavy volume above some overhead resistance at around $93 a share. Since triggering that breakout, shares of FDS have soared to a recent high of $109.20 a share. During that move, shares of FDS have consistently made higher lows and higher highs, which is bullish technical price action. That move has how pushed FDS within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on FDS, then I would wait until after they report and look for long-biased trades if this stock can manage to trigger a break out above some near-term overhead resistance at $108.00 to $109.20 a share with
high volume. Look for volume on that move that registers near or above its three-month average action of 400,680 shares. If we get that action, then the bulls could easily push FDS towards $120 a share or higher post-earnings.
I would avoid FDS or look for short-biased trades if after earnings this stock fails to trigger that breakout, and then drops below its 50-day moving average of $103.27 to $102.11 a share with high-volume. If we get that move, then look for FDS to trade down towards $98 to $95 a share or possibly lower if the bears blast this stock down post-earnings.