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Another potential earnings short-squeeze trade is
3D Systems(DDD - Get Report), which is set to release numbers on Thursday before the market open. This company is a provider of three-dimensional content-to-print solutions including 3D printers, print materials and on-demand custom parts services for professionals and consumers. Wall Street analysts, on average, expect 3D Systems to report revenue of $84.10 million on earnings of 27 cents per share.
Last Thursday, JPMorgan downgraded shares of 3D Systems to underweight from neutral with a price target of $34.50 a share, citing the big run in the stock of 148% on the year, and there is probably little upside in the near term. That said, the trend is your friend in the markets, and 3D Systems is uptrending strong as we get closer to its earnings report.
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The current short interest as a percentage of the float for 3D Systems is extremely high at 18.8%. That means that out of the 46.43 million shares in the tradable float, 9.39 million shares are sold short by the bears. This is a very large short interest on a stock with a relatively low tradable float. Taking that into account, along with this stock's strong uptrend, we could easily see a monster short-squeeze develop post-earnings if 3D Systems delivers the news the bulls are looking for.
technical perspective, DDD is currently trading above its 50-day and 200-day
moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares soaring from a low of $20.10 to its recent high of $37 a share. During that move, shares of DDD have been consistently making higher lows and higher highs, which is bullish technical price action. That move has quickly pushed DDD within range of
triggering a major breakout trade post-earnings.
If you're bullish on DDD, then I would wait until after its report and look for long-biased trades if this stock can manage to break out above some
near-term overhead resistance at $36.24 to $37 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1 million shares. If we get that action, then look for DDD to trade north of $40 a share post-earnings.
I would avoid DDD or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below its 50-day moving average of $31.71 a share with heavy volume. If we get that action, then DDD could easily take out some more support at $30 a share and possibly trend down toward $27.50 a share if the bears hammer this stock post-earnings.