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One potential earnings short-squeeze trade is communications equipment maker
JDS Uniphase(JDSU), which is set to release numbers on Tuesday after the market close. This company is a provider of communications test and measurement solutions and optical products for telecommunications service providers, wireless operators, cable operators, and network equipment manufacturers. Wall Street analysts, on average, expect JDS Uniphase to report revenue of $423.18 million on earnings of 12 cents per share.
During the last quarter, this company missed Wall Street estimates by 2 cents, after it reported a net income of 5 cents per share vs. Wall Street estimates of 7 cents per share. JDS Uniphase topped Wall Street estimates in the second quarter.
Just this morning, Goldman Sachs Group issued a new buying rating on shares of JDS Uniphase with a $14 a share price target. Goldman said the company should see increased customer spending in the second half of the year.
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The current short interest as a percentage of the float for JDS Uniphase sits at 4.2%. That means that out of the 230.93 million shares in the tradable float, 9.43 million shares are sold short by the bears.
technical perspective, JDSU is currently trading above its 50-day moving average and below its 200-day moving average, which his neutral trendwise. This stock has been trading within a range for the past two months, with shares moving between $8.47 on the downside and $11.30 on the upside. A move outside of that range post-earnings should setup the next major trend for JDSU.
If you're bullish on JDSU, then I would wait until after they report and look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $11.30 a share, and then above its
200-day moving average of $11.59 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 4,977,950 shares. If we get that move, then look for JDSU to re-test or possibly take out its next major overhead resistance level at $13.55 a share.
I would avoid JDSU 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 $10.02 a share with heavy volume. If we get that action, then JDSU will likely re-test or possibly take out its next major support levels at $9.33 to $8.47 a share post-earnings.