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My final earnings short-squeeze play today is sporting activities player
Life Time Fitness(LTM), which is set to release numbers on Thursday before the market open. This company operates multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment. Wall Street analysts, on average, expect Life Time Fitness to report revenue of $286.68 million on earnings of 72 cents per share.
Last Tuesday, Stifel Nicolaus initiated coverage on Life Time Fitness with a hold rating on the stock. During the last three months, this stock has been trending lower with shares off by around 9%. The current short interest as a percentage of the float for Life Time Fitness is very high at 15.7%. That means that out of the 37.92 million shares in the tradable float, 6.18 million are sold short by the bears.
technical perspective, LTM is currently trading right above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been downtrending big-time for the last four months, with LTM plunging from its March high of $52.68 to a low of $40.40 a share. During that downtrend, LTM has been consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has started to rebound strong off that $40.40 low with the stock hitting a recent high of $48.09 a share, and with it current trading at $44 a share.
If you're bullish on LTM, then I would wait until after they report earnings and look for long-biased trades if this stock clears and maintains a trend back above its 200-day moving average of $45.18 a share with high-volume. Look for volume on that move that registers near or above its three-month average action of 493,662 shares. If we get that action, then I would look for LTM to re-test and possibly take out its next major overhead resistance levels at $48.06 to $49.88 a share if the bulls gain full control of this stock post-earnings.
I would simply avoid LTM or look for short-biased trades if this stock fails to move back above its 200-day, and then if it fails to hold above its 50-day moving average of $44 a share. If it breaks below the 50-day before the report, then use $42.95 as the key support zone to trigger short-biased trades. If we get that action, then look for LTM to take out its next major support zones at $40.40 to $39.04 a share once the bears smash this stock lower 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.