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Another earnings short-squeeze trade idea is footwear retail player
Brown Shoe (BWS), which is set to release its numbers on Tuesday before the market open. This company's activities include the operation of retail shoe stores and e-commerce Websites, as well as the sourcing and marketing of footwear for women and men. Wall Street analysts, on average, expect Brown Shoe Company to report revenues of $606.31 million on earnings of 3 cents per share.
Brown Shoe has been skyrocketing so far in 2012, with shares up around 70%. The stock hit a new 52-week high today of $15.31 ahead of its earnings report.
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The current short interest as a percentage of the float for Brown Shoe is pretty high at 11.8%. That means that out of the 40.38 million shares in the tradable float, 4.74 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish news from Brown Shoe Company and this stock could experience a large short-squeeze post-earnings.
From a technical perspective, BWS is currently trading above both its 50-day moving and 200-day moving averages, which is bullish. This stock has been uptrending very strong for the past four months, with shares soaring from a low of $8.23 to its recent 52-week high of $15.31 a share. During that uptrend, shares of BWS have been consistently making higher lows and higher highs, which is bullish technical price action.
If you're in the bull camp on BWS, then I would wait until after they report and look for long-biased trades if this stock manages to trigger a break out to a new 52-week high above $15.31 a share with heavy volume. Look for volume on that move that hits near or above its three-month average action of 531,581 shares. If we get that move, then BWS will have a great chance of re-testing or possibly taking out its next major overhead resistance levels at $17.38 to $18.79 a share post-earnings.
I would simply avoid BWS or look for short-biased trades if after earnings this stock fails to trigger that breakout, and then moves back below some near-term support at $14 to $13.40 a share with heavy volume. If we get that move, then BWS will setup to re-test or possibly take out its next major support levels at $12.89 to $12 a share post-earnings.