My first earnings short-squeeze trade idea is patent player Acacia Research (ACTG), which is set to report results on Thursday after the market close. This company, through its operating subsidiaries, acquires, develops, licenses and enforces patented technologies. It generates revenue and related cash flow from the granting of rights for the use of patented technologies. Wall Street analysts, on average, expect Acacia Research to report revenue of $42.24 million on earnings of 24 cents per share.
If you're looking for an uptrending heavily shorted stock that the bears are pressing their bets with ahead of the quarter, then make sure to check out shares of Acacia Research. This stock hit a near-term low of $32.44 in June and has since then run up to its current price of $39 a share.The current short interest as a percentage of the float for Acacia Research sits at 5.9%. That means that out of the 45.94 million shares in the tradable float, 2.85 million shares are sold short by the bears. The short-sellers have also been increasing their bets from the last reporting period by 12.4%, or by about 312,800 shares. If the bears are caught leaning too hard into this quarter, then we could easily see a big-time short-covering rally kick off post-earnings. From a technical perspective, ACTG is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock dropped big back in May from a high of $42.42 to a recent low of $32.44 a share. During that slide lower, shares of ACTG have consistently made lower highs and lower lows, which is bearish technical price action. That said, ACTG has started to rebound of late with shares moving back above both its 50-day and 200-day moving averages. That move has pushed ACTG within range of triggering a near-term breakout trade. If you're bullish on ACTG, then I would wait until after earnings and look for long-biased trades if this stock can manage to trigger a breakout above some near-term overhead resistance at $40.32 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 374,862 shares. If we get that move, then ACTG will likely re-test and possibly take out its next major overhead resistance level of $42.43 a share. Any high-volume move over $42.43 should give ACTG a great chance of tagging $44.98 a share. I would simply avoid ACTG or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below both its 200-day at $37.71 and its 50-day at $36.49 a share with high-volume. If we get that action, then ACTG will likely trend down towards $35 to $33 a share, or possibly even lower if the bears hammer this stock post-earnings. As of the most recently reported quarter, ACTG was one of George Soros' top holdings.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV