AFFY data by YCharts
My final earnings short-squeeze trade idea is biotechnology and drugs player
, which is set to release numbers on Wednesday after the market close. This company is engaged in developing drugs to improve the treatment of serious and often life-threatening conditions. Its product candidate, peginesatide, is for the treatment of anemia in chronic kidney disease patients on dialysis. Wall Street analysts, on average, expect Affymax to report revenues of $11.30 million on a loss of 69 cents per share.
Just recently, partner Fresenius stated that it intends to dose more patients than predicted with Affymax's Omontys. Rodman & Renshaw said they think Affymax could exceed the firm's third-quarter and fourth-quarter estimates. The firm sees this news as a positive for Affymax, and it kept an outperform rating on the stock.
The current short interest as a percentage of the float for Affymax is very high at 17.8%. That means that out of the 30.81 million shares in the tradable float, 6.28 million are sold short by the bears. The short-sellers have also been increasing their bets from the last reporting period by 8.9%, or by about 511,000 shares. If the bears are caught pressing their bets too hard into this quarter, then we could easily see a large short-squeeze develop post-earnings.
From a technical perspective, AFFY is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently exploded back above its 50-day moving average in July on massive upside volume. Following that move, the stock has started to move within a tight range between $17.38 and $15.40 a share. A move outside of that range post-earnings will likely setup the next major trend for AFFY.
If you're bullish on AFFY, then I would wait until after they report earnings and look for long-biased trades, if it can manage to trigger a break out above some near-term overhead resistance at $16.98 to $17.33 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1,021,410 shares. If we get that action, then look for AFFY to hit or trade north of $20 a share post-earnings.
I would simply avoid AFFY or look for short-biased trades after earnings if it fails to trigger that breakout, and then takes out some near-term support at $15.40 a share with heavy volume. If we get that move, then AFFY will setup to re-test and possibly take out its 50-day moving average of $14.39 a share post-earnings.
To see more potential earnings short squeeze plays, check out the
Earnings Short Squeeze Plays
portfolio on Stockpickr.