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Another potential earnings short-squeeze trade is insurance holding company
Progressive(PGR - Get Report), which is set to release its numbers on Wednesday before the market open. Wall Street analysts, on average, expect Progressive to report revenue of $4.17 billion on earnings of 26 cents per share.
This stock has been uptrending modestly strong so far in 2012, with shares up around 12%. As we approach its earnings report, shares of Progressive are trading just two points off its 52-week high of $23.41 a share.
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The current short interest as a percentage of the float for Progressive sits at 5.4%. That means that out of the 555.69 million shares in the tradable float, 29.85 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.8%, or by about 1.64 million shares. If the shorts are caught leaning too hard into this quarter, then we could see a decent short-squeeze setup post-earnings.
From a technical perspective, PGR is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending rather strong for the last two months, with shares trading from a low of $19.34 to its recent high of $21.94 a share. During that uptrend, shares of PGR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed PGR within range of triggering a breakout trade post-earnings.
If you're in the bull camp on PGR, then I would wait until after its report and look for long-biased trades if this stock can manage to break out above some past overhead resistance levels at $22.23 to $23.41 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 4.6 million shares. If PGR triggers that breakout, then look for this stock to head north of $25 a share post-earnings.
I would simply avoid PGR or look for short-biased trades if after earnings this stock fails to trigger that breakout, and then drops back below its 200-day moving average at $20.92 a share with high volume. If we get that move, then FDO will setup to-re-test or possibly take out its 50-day moving average of $20.19 a share.