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One potential earnings short-squeeze trade in the investment services complex is
Greenhill(GHL - Get Report), which is set to release numbers on Wednesday after the market close. This is an independent investment bank focused on providing financial advice on mergers, acquisitions, restructurings, financings and capital raising to corporations, partnerships, institutions and Governments. Wall Street analysts, on average, expect Greenhill to report revenue of $60.21 million on earnings of 28 cents per share.
On Monday, analysts at Susquehanna upgraded this stock from neutral to positive and raised its price target from $33 to $44 per share.
The current short interest as a percentage of the float for Greenhill is extremely high at 18.9%. That means that out of the 26.97 million shares in the tradable float, 5.05 million shares are sold short by the bears. The short-sellers have also been increasing their bets from the last reporting period by 24.5%, or by about 991,600 shares. If the bears are caught pressing too hard into this quarter, then we could see a massive short-squeeze develop if Greenhill & Co. can please the bulls with its earnings report.
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technical perspective, GHL is currently trading above its 50-day moving average and right below its 200-day moving average, which is neutral trendwise. This stock has been downtrending hard for the past four months, with shares falling from a high of $46.17 to a recent low of $31.77 a share. During that slide lower, shares of GHL have consistently made lower highs and lower lows, which is bearish technical price action. That said, this stock has started to uptrend since hitting that low of $31.77, with shares making higher lows and higher highs. That move has now pushed GHL within range of triggering a near-term
breakout trade post-earnings.
If you're bullish on GHL, then I would wait until after they report and look for long-biased trades if this stock can manage to take out its 200-day moving average of $37.95, and then break out above resistance at $39 a share with
high volume. Look for volume on that move that hits near or above its three-month average volume of 430,949 shares. If we get that action, then GHL will have a great chance of re-testing and possibly taking out its next significant overhead resistance levels at $44 to $46.17 a share.
I would avoid GHL or look for short-biased trades if after earnings it fails to trigger that move above its 200-day, and then drops below some near-term support $36 a share with heavy volume. If we get that action, then GHL will likely re-test and possibly take out its 50-day
moving average of $34.55, and some more near-term support levels at $33.61 to $33.29 a share.