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5 Stocks Set to Soar on Bullish Earnings

Stocks in this article: AVAV LEN SNX APOL OMN

Synnex

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One potential earnings short-squeeze trade in the computer peripherals complex is Synnex (SNX), which is set to release numbers on Monday after the market close. This company provides distribution and business process outsourcing services to resellers, retailers, and original equipment manufacturers worldwide. Wall Street analysts, on average, expect Synnex to report revenue of $2.51 billion on earnings of 90 cents per share.

If you're looking for a heavily shorted beaten-down large-cap stock heading into its earnings report this week, then make sure to check out shares of Synnex. This stock is down over 20% in the last three months, and shares have plunged from its 2012 high of $44.25 to its recent low of $32.41 a share.

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The current short interest as a percentage of the float for Synnexis rather high at 12%. That means that out of the 26.29 million shares in the tradable float, 3.16 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.8%, or by about 85,000 shares. If the bears are caught learning too hard into this quarter, then we could easily see a large short-squeeze develop for shares of Synnex.

From a technical perspective, SNX is currently trading below both its 50-day and 200-day moving averages, which is bullish. This stock has been downtrending hard for the last three months, with shares dropping from $44.25 to a recent low of $32.40 a share. During that downtrend, shares of SNX have consistently made lower highs and lower lows, which is bearish technical price action. That said, during the last few weeks, shares of SNX have started to trend sideways between $32.40 and $34.69 a share. A move outside of that range post-earnings will likely setup SNX for its next major trend.

If you're bullish on SNX, then I would wait until after they report and look for long-biased trades if this stock can manage to trigger a breakout above some near-term overhead resistance at $34.69 a share and then its 50-day moving average of $34.87 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 247,897 shares. If we get that action, then SNX could easily re-test and possibly take out its next significant overhead resistance levels at $38.80 to $38.98 a share.

I would avoid SNX or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below its major near-term support at $32.72 to $32.40 a share with high-volume. If we get that move, then target a drop towards $30 to $28 a share if the bears whack this stock lower post-earnings. Apollo Group

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One potential earnings short-squeeze trade in the education complex is Apollo Group (APOL), which is set to release numbers on Monday after the market close. This company, through its subsidiaries, provides online and on-campus educational programs and services at the undergraduate, masters, and doctoral levels. Wall Street analysts, on average, expect Apollo Group to report revenue of $1.12 billion on earnings of 97 cents per share.

During the last quarter, this company beat Wall Street estimates by 19 cents, coming in at 58 cents per share vs. the estimate of 39 cents per share. That registered the fourth straight quarter in a row of beating Wall Street estimates.

The current short interest as a percentage of the float for Apollo Group is very high at 13.5%. That means that out of the 107.18 million shares in the tradable float, 14.29 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 14.7%, or by about 1.83 million shares. If the bears are caught pressing their bets too hard into this quarter, then we could easily see a solid short-covering rally for shares of Apollo Group post-earnings.

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From a technical perspective, APOL is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been beaten-down big-time by the bears since March, with shares dropping from over $54 to a recent low of $30.93 a share. During that downtrend, shares of APOL have mostly made lower highs and lower lows, which is bearish technical price action. That said, since hitting that low of $30.93 shares of APOL have started to make higher lows, and it's in position to make a higher high and break out post-earnings.

If you're in the bull camp on APOL, I would look for long-biased trades if after earnings it triggers a break out above some near-term overhead resistance at $34.79 to $35.58 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 2.3 million shares. If we get that action, then APOL will have a great chance of re-testing and possibly taking out its next major overhead resistance levels at $36.25 to $37.36 a share. If all those levels get taken out post-earnings, then APOL has a great chance of hitting $40 to its 200-day moving average of $43.77 a share.

I would simply avoid APOL or look for short-biased trades after earnings the stock fails to trigger that breakout, and then moves below some near-term support at $32.26 to $31.16 a share with high-volume. If we get that action, then APOL will be at risk of taking out its 52-week low of $30.93 a share, which would be very bearish technical price action.

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