This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

4 Stocks Poised to Pop on Earnings

Resources Connection

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Another potential earnings short-squeeze trade is business services player Resources Connection (RECN), which is set to release its numbers on Tuesday after the market close. This professional services firm that provides clients with experienced professionals specializing in finance, accounting, risk management and internal audit, corporate advisory and strategic communications. There are no analyst estimates available for Resources Connection.

>>5 Stocks Hedge Funds Hate -- But Should You?

This stock is off to a strong start in 2012, with shares up around 25% so far. Shares of Resources Connection are trading just one point off their 52-week high of $14.49 as we near the company's earnings report. The current short interest as a percentage of the float for Resources Connection stands at 3.7%. That means that out of the 40.50 million shares in the tradable float, 1.14 million shares are sold short by the bears.

From a technical perspective, RECN is currently trading above both its 50-day and 200-day moving averages, which is bullish. Shares of RECN recently formed a double bottom chart pattern at around $10.89 to $11.04 a share, and then subsequently went on to soar to its recent high of $13.61 a share. During that spike higher, shares of RECN were consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed RECN within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on RECN, then I would wait until after its report and look for long-biased trades if this stock can manage to break out above some near-term overhead resistance levels at $13.61 to $14.36 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 204,956 shares. If RECN triggers that breakout, then this stock will have a great chance of re-testing or possibly taking out its next overhead resistance levels at $16 to $17 a share.

I would simply avoid RECN or look for short-biased trades if after earnings this stock fails to trigger that breakout, and then drop below some near-term support at $12.75 to $12.50 a share with high volume. If we get that move, then RECN will setup to re-test or possibly take out its 200-day at $12.16 and its 50-day at $12.08 a share post-earnings.

3 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,055.87 -116.81 -0.68%
S&P 500 1,982.77 -11.52 -0.58%
NASDAQ 4,508.6880 -19.0010 -0.42%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs