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My first earnings short-squeeze trade idea today is real estate investment trust
Host Hotels and Resorts(HST - Get Report), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect the company to report revenue of $1.21 billion on earnings of 21 cents per share.
Host Hotels and Resorts has reported quarterly earnings results that have topped Wall Street estimates for the last three quarters in a row. During the last quarter, it reported a profit of 34 cents per share vs. Wall Street estimates of 33 cents per share. This company is looking to extend its trend of revenue increases to its fourth-straight quarter heading into its report.
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The current short interest as a percentage of the float for Host Hotels and Resorts stands at 7.9%. That means that out of the 709.68 million shares in the tradable float, 55.63 million shares are sold short by the bears.
From a technical perspective, HST is currently trading above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has sold off recently from its high of $17.48 right to its 200-day moving average of $15.61 a share. During that selloff, shares of HST have been making lower highs and lower lows, which is bearish technical price action. That said, if HST can manage to hold its trend above its 50-day and 200-day, then it could setup to breakout post-earnings.
If you're bullish on HST, then I would wait until after its report and look for long-biased trades once it manages to break out above some near-term overhead resistance levels at $16.25 to $16.67 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 7.2 million shares. If that breakout triggers, then look for HST to re-test and possibly take out its next significant overhead resistance levels at $17.48 to $19.43 a share.
I would simply avoid HST or look for short-biased trades if after earnings it fails to trigger that breakout and then drops below some near-term support at $15.52 to $15 a share with heavy volume. If we get that move, then HST will setup to re-test or possibly take out its next major support levels at $14.25 to $13.90 a share.