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5 Hated Stocks Set to Soar on Earnings

Take-Two Interactive

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My first earnings short-squeeze play today is video game maker Take-Two Interactive (TTWO - Get Report), which is set to report results on Tuesday after the market close. This company is a developer, marketer and publisher of interactive entertainment for consumers worldwide. Wall Street analysts, on average, expect Take-Two Interactive to report revenue of $254.18 million on a loss of 65 cents per share.

During the last quarter, this company missed estimates by 12 cents per share, reporting a loss of 72 cents per share vs. Wall Street estimates of a net loss of 60 cents per share. For the third quarter of the last fiscal year, Take-Two Interactive beat Wall Street estimates by 1 cent.

The current short interest as a percentage of the float for Take-Two Interactive is very high at 14.5%. That means that out of the 76.44 million shares in the tradable float, 12.78 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish earnings news out of Take-Two Interactive, and we could see a large short-squeeze develop post-earnings.

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From a technical perspective, TTWO is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stuck in a nasty downtrend for the last six months, with shares plunging from a high of $16.23 to a recent low of $8.69 a share. During that massive slide lower, shares of TTWO have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're bullish on TTWO, then I would wait until after it reports earnings and look for long-biased trades if this stock can manage to take out its 50-day moving average of $10.07 a share, and some more overhead resistance at $10.35 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 2.1 million shares. If we get that move, then TTWO could spike toward $11.81 to $12.27 a share or possibly even near its 200-day moving average of $13.53 a share.

I would simply avoid TTWO or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below some major near-term support at $8.69 a share with high volume. If we get that action, then TTWO will enter new 52-week-low territory, which is very bearish price action. Some targets to the downside would be $8 to $7 a share if the bears hammer this stock post-earnings.

Take Two shows up on a recent list of 5 Oversold Stocks Ready for a Bounce Higher.
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