A potential earnings short-squeeze trade in the water transportation complex is Knightsbridge Tankers (VLCCF), which is set to release numbers on Wednesday before the market open. This company is engaged in the seaborne transportation of crude oil and dry bulk cargoes. Wall Street analysts, on average, expect Knightsbridge to report revenue of $21.85 million on earnings of 29 cents per share.
The current short interest as a percentage of the float for Knightsbridge Tankers is pretty high at 9.2%. That means that out of the 24.42 million shares in the tradable float, 2.11 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 3.5%, or by about 71,000 shares.From a technical perspective, VLCCF is currently trading above both its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been trading in a tight coiled range for the past two months, with shares moving between $8.94 on the upside and $8.25 on the downside. A move outside of that tight range post-earnings will likely setup the next major trend for VLCCF. If you're bullish on VLCCF, then I would wait until after they report earnings and look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $8.94 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 264,453 shares. If we get that move, then look for VLCCF to re-test and possibly take out its next major overhead resistance levels at $10.02 to $11.18 a share. I would avoid VLCCF or look for short-biased trades if after earnings it fails to trigger that breakout, and then moves below some key near-term support levels at $8.35 to $8.25 a share with heavy volume. If we get that action, then look for VLCCF to re-test and possibly take out its next major support level at $7.77 a share. Any high-volume move below $7.77 a share should be considered bearish action, since it will mean this stock is trading at a new 52-week low. 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.
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