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My final earnings short-squeeze trade idea is furniture and fixtures player
Sealy(ZZ), which is set to release numbers on Thursday after the market close. This company is engaged in the consumer products business and manufacture, distribute and sell conventional bedding products, including mattresses and box springs, as well as specialty bedding products, which include latex and visco-elastic mattresses. Wall Street analysts, on average, expect Sealy to report revenue of $344.21 million on 3 cents per share.
This stock has been uptrending very strong so far in 2012, with shares up over 25%. That strong trend has shares of Sealy trading just 30 cents off its 52-week high of $2.45 a share in front of its earnings report. The current short interest as a percentage of the float for Sealy is extremely high at 27.1%. That means that out of the 34.36 million shares in the tradable float, 13.99 million are sold short by the bears.
From a technical perspective, ZZ is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock formed a double bottom in early September at around $1.52 to $1.55 a share. Since forming that bottom, shares of ZZ have skyrocketed and hit a recent high of $2.28 a share. That move has now pushed ZZ within range of triggering a major breakout trade post earnings.
If you're bullish on ZZ, then I would wait until after its report and look for long-biased trades if it can manage to break out above some near-term overhead resistance levels at $2.28 to $2.45 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 491,642 shares. If we get that action, then ZZ will have a great chance of re-testing or possibly taking out its next major overhead resistance levels at $3 to $3.50 a share post-earnings.
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.