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Another possible earnings short-squeeze trade is fabricated plastic and rubber player
Raven Industries(RAVN - Get Report), which is set to release numbers on Tuesday before the market open. This company manufactures various products for industrial, agricultural, energy, construction and military/aerospace markets primarily in North America. Wall Street analysts, on average, expect Raven Industries to report revenue of $101.41 million on earnings of 38 cents per share.
During the last quarter, this company reported revenue of $117.9 million, and GAAP reported sales were 16% higher than the prior-year quarter's $105.5 million. Also during the last quarter, Raven reported earnings per share of 52 cents, which was 21% higher than the prior-year quarter's earnings of 43 cents per share.
The current short interest as a percentage of the float for Raven Industries sits at 3.7%. That means that out of the 106.57 million shares in the tradable float, 9.95 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.2%, or by about 52,000. If the bears are caught leaning too hard into this quarter, then we could easily see a decent short-covering rally post-earnings.
From a technical perspective, RAVN is currently trading above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has recently sold off from $37.73 to its recent low of $31.28 a share. During that selloff, shares of RAVN has been making mostly lower highs and lower lows, which is bearish technical price action. That said, the stock has also held around its 200-day moving average of $31.73 a share off this recent selloff.
If you're in the bull camp on RAVN, then I would look for long-biased trades after earnings if this stock manages to trigger a near-term break out above some overhead resistance levels at $33.13 a share, and then above its 50-day moving average of $34.01 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 97,947 shares. If we get that move, then look for RAVN to hit to re-test and possibly take out its next significant overhead resistance levels at $34.61 to $35.16 a share post-earnings. I would simply avoid RAVN or look for short-biased trades after earnings the stock fails to trigger that breakout, and then moves back below some near-term support at $31.28 a share with high volume. If we see that move, then RAVN could drop dramatically towards its next significant support level at $28.50 a share post-earning.