One potential earnings short-squeeze trade in the alternative energy complex is Fuel Systems Solutions (FSYS), which is set to release numbers on Wednesday before the market open. This company engages in the design, manufacture, and supply of alternative fuel components and systems for use in the transportation, industrial and power generation markets worldwide. Wall Street analysts, on average, expect Fuel Systems Solutions to report revenues of $105.09 million on earnings of 10 cents per share.
The current short interest as a percentage of the float for Fuel Systems Solutions is pretty high at 13.4%. That means that out of the 14.20 million shares in the tradable float, 1.91 million shares are sold short by the bears. This is a low-float high-short interest stock, so if the bulls get the earnings numbers they're looking for, this stock could explode post-earnings.
From a technical perspective, FSYS is currently trading above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been trending inside of a large sideways trading pattern for the last two months, with shares bouncing between $14.02 and $18.55 a share. During that sideways trade, shares of FSYS have been making higher lows and higher highs, with the stock taking out the upper-end of the range today. That move is pushing FSYS close to triggering a near-term breakout trade post-earnings.If you're bullish on FSYS, then I would wait until after they report earnings and look for long-biased trades if this stock can manage to take out its 200-day moving average of $19.83 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 295,781 shares. If we get that breakout, then look for FSYS to possibly re-test or take out its next major overheard resistance levels at $24.16 to $24.63 a share post-earnings. I would avoid FSYS or look for short-biased trades if after earnings it fails to trigger that breakout, and then moves below Tuesday's low of $18.50 a share with heavy volume. If we get that action, then look for FSYS to possibly re-test or take out its 50-day moving average of $16.14 a share post-earnings.
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