This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

5 Hated Stocks Set to Soar on Earnings

Stocks in this article: TTWOMRGEOMPIBMRNINCY

Incyte

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

My final earnings short-squeeze trade idea today is biotechnology and drugs player Incyte (INCY), which is set to release numbers on Thursday before the market open. This company is focused on the discovery, development and commercialization of small molecule drugs to treat serious unmet medical needs. Wall Street analysts, on average, expect Incyte to report revenue of $84.56 million on earnings of zero cents per share.

If you're looking for an extremely strong trending heavily-shorted biotech stock ahead of its earnings report this week, then make sure to take a close look at shares of Incyte. This stock has been skyrocketing so far in 2012 with shares up around 70%, and this stock is currently trading just one point off its 52-week high of $26.30 a share.

The current short interest as a percentage of the float for Incyte is pretty high at 12.7%. That means that out of the 128.10 million shares in the tradable float, 15.91 million are sold short by the bears. The short-sellers have also been increasing their bets from the last reporting period by 8.6%, or by about 1.25 million shares. If the bears are caught pressing their bets too hard ahead of this quarter, then we could easily see a large short squeeze post-earnings.

From a technical perspective, INCY is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending like a beast for the last six months, with shares soaring from a low of $16.32 to a recent high of $26.30 a share. During that uptrend, shares of INCY have consistently made higher lows and higher highs, which is bullish technical price action. That move has now quickly pushed INCY within range of triggering a breakout trade post-earnings. If you're bullish on INCY, then I would wait until after it reports earnings and look for long-biased trades if it can manage to trigger a break out above some near-term overhead resistance at $25.89 to $25.97 a share, and then its 52-week high of $26.30 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 1.6 million shares. If we get that action, then I would look for INCY to easily trade north of $30 a share post-earnings.

I would simply avoid INCY or look for short-biased trades if it fails to trigger that breakout after its earnings report, and it then takes out some near-term support at $25 a share with heavy volume. If we get that move, then INCY will setup to re-test and possibly take out its 50-day moving average of $23.55 a share if the bears spark a decent selloff 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.

RELATED LINKS:



Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
6 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs