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An earnings short-squeeze play in the restaurant complex is
Ruby Tuesday(RT - Get Report), which is set to release numbers on Wednesday after the market close. This company, together with its subsidiaries, owns, develops, operates, and franchises casual dining restaurants. Wall Street analysts, on average, expect Ruby Tuesday to report revenue of $331.52 million on earnings of 6 cents per share.
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This stock has been doing absolutely nothing heading into its report, with shares basically flat on the year up 2.75%. The current short interest as a percentage of the float for Ruby Tuesday is notable at 6.3%. That means that out of the 52.79 million shares in the tradable float, 3.78 million shares are sold short by the bears. That's more than enough shorts to get the stock juiced to the upside if Ruby Tuesday can give the bulls the news their looking for.
From a technical perspective, RT is currently trading below its 200-day moving average and above its 50-day moving average, which is neutral trendwise. This stock tagged a low of $4.98 in July and has since then trended up to its recent high of $7.69 a share. During that spike higher, shares of RT went on to make mostly higher lows and higher highs, which is bullish technical price action. That move now has RT trading within range of triggering a near-term breakout trade post-earnings.
If you're bullish on RT, 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 $7.56 to $7.69 a share with high volume. Look for volume on that move that tracks in at near or above its three-month average volume of 455,083 shares. If RT can trigger that move, then this stock will setup to re-test or possibly take out its next significant overhead resistance levels at $9.39 to $11 a share.
I would avoid RT or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day at $6.92 a share with high volume. If we get that action, then RT will setup to re-test and possibly take out its next significant support level at $6.58 a share. Any high-volume move below $6.58 could send RT well below $6 a share.