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My final earnings short-squeeze trade idea today is chemical manufacturing player
Omnova Solutions(OMN - Get Report), which is set to release numbers on Wednesday after the market close. This company is a provider of emulsion polymers, specialty chemicals and decorative and functional surfaces for a range of commercial, industrial and residential end uses. Wall Street analysts, on average, expect Omnova Solutions to report revenues of $317 million on earnings of 15 cents per share.
If you're looking for an uptrending small-cap stock heading into its earnings report this week, then make sure to check out shares of Omnova Solutions. This stock has soared so far in 2012 with shares up over 60%, and the stock is currently trading less than one point off its
52-week high of $8.17 a share. The current short interest as a percentage of the float for Omnova Solutions is notable at 3.9%. That means that out of the 44.13 million shares in the tradable float, 1.72 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 10.7%, or by about 166,000 shares.
From a technical perspective, OMN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the past six months, with shares soaring from a low of $4.50 to a recent high of $7.97 a share. During that uptrend, shares of OMN have consistently made higher lows and higher highs, which is bullish technical price action. That move has now pushed OMN within range of triggering a near-term
breakout trade post-earnings.
If you're bullish on OMN, then I would wait until after its report and look for long-biased trades if it can manage to trigger a breakout above some near-term overhead resistance at $7.75 to $7.97 a share with high-volume. Look for volume on that move that registers near or above its three-month average action of 231,770 shares. If we get that action, then OMN could easily spike towards its next significant overheard resistance level at $9.43 a share post-earnings.
I would simply avoid OMN or look for short-biased trades if it fails to trigger that breakout, and then moves back below its 50-day moving average of $7.17 a share with heavy volume. If we get that move, then I would target a drop towards $6.60 to $6.40 a share or possibly much lower if the bears hammer this stock 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.