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My final earnings short-squeeze play today is metal mining player
Alcoa(AA - Get Report), which is set to release numbers on next Monday after the market close. This company is engaged in the production and management of primary aluminum, fabricated aluminum and alumina combined, through its participation in technology, mining, refining, smelting, fabricating and recycling. Wall Street analysts, on average, expect Alcoa to report revenues of $5.83 billion on earnings of 6 cents per share.
If you're looking for a large-cap stock that's been taken lower heading into its quarterly earnings report, then make sure to check out shares of Alcoa. This stock has been smacked lower by the sellers during the last three months, since shares are down by around 15%. Shares of Alcoa are currently trading just 40 cents above its
52-week low of $8.21 a share.
The current short interest as a percentage of the float for Alcoa is pretty high at 7.6%. That means that out of the 1.07 billion shares in the tradable float, 80.65 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 3.1%, or by about 2.45 million shares.
From a technical perspective, AA is currently trading below both its 50-day and 200-day
moving averages, which is bearish. This stock has trending lower for the last five months, with shares sliding down from its February high of $10.88 to a recent low of $8.21 a share. During that downtrend, shares of AA have mostly made lower highs and lower lows, which is bearish price action. That said, this stock has started to trend sideways during the last month, between $8.21 on the downside and $9 on the upside. A move outside of that range post-earnings will likely set up the next major trend for AA.
If you're in the bull camp on AA, I would look for long-biased trades if after earnings it triggers a break out above some near-term overhead resistance at $9 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 23.3 million shares. If we get that action, then AA could easily tag $10 to $10.50 a share post-earnings.
I would simply avoid AA or look for short-biased trades after earnings the stock fails to trigger that breakout, and then moves below some major near-term support at $8.29 to $8.21 a share with high-volume. If we get that action, then AA will enter new 52-week low territory which will be very bearish. The stock could easily hit $7 post-earnings if we see that bearish action.
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.