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A possible earnings short-squeeze trade in the oil and gas complex is
Evolution Petroleum(EPM - Get Report), which is set to release numbers on Wednesday after the market close. This is a petroleum company engaged primarily in the acquisition, exploitation and development of properties for the production of crude oil and natural gas, onshore in the U.S. Wall Street analysts, on average, expect Evolution Petroleum to report revenue of $4.82 million on earnings of 5 cents per share.
The current short interest as a percentage of the float for Evolution Petroleum sits at 4.6%. That means that out of the 14.36 million shares in the tradable float, 1.03 million shares are sold short by the bears. This stock has a decent short interest and an extremity low tradable float. Any bullish earnings news could easily spark a solid short-covering rally post-earnings.
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technical perspective, EPM is currently trading below both its 50-day and 200-day
moving averages, which is bearish. This stock has been trading within a range for the past three months, with shares moving between $7.50 on the downside and $8.99 on the upside. A move outside of that range post-earnings will likely setup the next major trend for EPM.
If you're in the bull camp on EPM, then I would look for long-biased trades after earnings if this stock manages to trigger breakout trade above some near-term overhead resistance levels at $8.56 to $8.60 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 58,567 shares. If that breakout triggers, then EPM will setup to re-test or possibly take out its next major overhead resistance level at $8.99 a share. If that $8.99 level gets taken out, then EPM could tag its
52-week high of $10.14 a share or higher post-earnings.
I would simply avoid EPM or look for short-biased trades after earnings the stock fails to trigger that breakout and then moves back below some major near-term support areas at $8 a share with high volume. If we get that move, then EPM will setup to re-test and possibly take out its next major support levels at $7.75 to $7.50 a share. A move below $7.50 will most likely take EPM back down towards $6.80 to $6.50 a share post-earnings.