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My first earnings short-squeeze play today is
Ascena Retail Group(ASNA - Get Report), which is set to release numbers on Wednesday after the market close. Ascena is a national specialty retailer of apparel for women and tween girls, operating through its wholly owned subsidiaries, the dressbarn, maurices and Justice brands. Wall Street analysts, on average, expect Ascena Retail Group to report revenue of $779.66 million on earnings of 29 cents per share.
During the last quarter, this company reported earnings per share of 34 cents, which failed to meet Wall Street estimates of 36 cents per share. Citigroup recently initiated coverage on this stock with a buy rating and a $25 price target. The current short interest as a percentage of the float for Ascena Retail Group is notable at 4.1%. That means that out of the 122.62 million shares in the tradable float, 5.03 million shares are sold short by the bears.
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From a technical perspective, ASNA is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the past two months, with shares soaring from a low of $16.99 to a recent high of $21.40 a share. During that uptrend, shares of ASNA have consistently made higher lows and higher highs, which is bullish technical price action. That move has now pushed ASNA within range of triggering a near-term breakout trade.
If you're bullish on ASNA, then I would wait until after they report earnings and look for long-biased trades if it can break out above some near-term overhead resistance levels at $21.40 to $22.07 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.7 million shares. If ASNA can trigger that breakout, then this stock has a great chance of re-testing and possibly taking out its 52-week high of $22.62 post-earnings. We could easily see ASNA hit $25 or higher if it clears its 52-week high with volume.
I would simply avoid ASNA or look for short-biased trades if after earnings it fails to trigger that breakout, and then takes out some near-term support at $20.50 a share with heavy volume. If we get that move, then ASNA will setup to re-test and possibly take out both its 50-day at $19.09 and its 200-day at $18.88 a share post-earnings.