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One earnings short-squeeze play is computer storage device maker
OCZ Technology Group(OCZ), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect OCZ Technology Group to report revenue of $119.69 million on a loss of 15 cents per share.
The current short interest as a percentage of the float for OCZ Technology Group is extremely high at 41.4%. That means that out of the 64.78 million shares in the tradable float, 26.85 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.5%, or by about 1.16 million shares.
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From a technical perspective, OCZ is currently trading well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending hard from late July, with shares plunging from $7.67 to its recent low of $3.03 a share. During that downtrend, shares of OCZ have been consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has now moved into oversold territory, since its current relative strength index reading is now below 30. Oversold can always get more oversold, but we can also watch for a bounce here in OCZ off earnings.
If you're bullish on OCZ, then I would wait until after its report and look for long-biased trades if this stock can manage to hold its trend above its recent low at $3.03 a share with strong upside volume flows. Look for volume on that move that hits near or above its three-month average action of 4.7 million shares. If OCZ can hold that level and start to uptrend with volume, then this stock could possibly hit $4.50 to its 50-day moving average of $5.10 a share post-earnings.
I would avoid OCZ or look for short-biased trades if after earnings it fails to hold above $3.03 a share. If we get that action, then OCZ will setup to trend lower and take out its 52-week low at $3.03 a share, which is bearish technical price action.