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My final earnings short-squeeze trade idea today is biotechnology and drugs player
PDL BioPharma(PDLI - Get Report), which is set to release numbers on Friday after the market close. This company is engaged in the management of antibody humanization patents and royalty assets, which consist of its Queen et al. patents and license agreements with various biotechnology and pharmaceutical companies. Wall Street analysts, on average, expect PDL BioPharma to report revenue of $118.54 million on earnings of 46 cents per share.
If you're looking for a strong trending heavily-shorted biotech stock heading into its earnings report, then make sure to check out shares of PDL BioPharma. This stock has trended higher by over 13% during the last three months, and the stock is currently hitting new
52-week highs as I pen this. The current short interest as a percentage of the float for PDL BioPharma is rather high at 11.4%. That means that out of the 128.46 million shares in the tradable float, 15.86 million are sold short by the bears.
>>22 Biopharma Stocks With Breakout Potential in 2012
From a technical perspective, PDLI is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong during the last six months, with shares rising from a low of $5.87 to today's intraday day high so far of $6.85 a share. During that uptrend, shares of PDLI have been making higher lows and higher highs, which is bullish technical price action.
If you're bullish on PDLI, then I would wait until after they report and look for long-biased trades if this stock manages to print a new 52-week high with heavy volume. Look for volume on that move that registers near or above its three-month average action of 1,620,590 shares. If we get that move, then PDLI could easily continue its uptrend towards $8 to $10 a share if the bulls gain complete control of this stock post-earnings.
I would simply avoid PDLI or look for short-biased trades if it fails to print a new 52-week high and then moves back below some near-term support at $6.60 to $6.50 a share with heavy volume. If we get that action, then PDLI will setup to re-test and possibly take out its 50-day moving average of $6.38 a share if the bears annihilate this sock 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.