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My first earnings short-squeeze candidate is online travel company
Expedia(EXPE - Get Report), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Expedia to report revenue of $1.17 billion on earnings of $1.26 per share.
Expedia is shooting to beat Wall Street estimates for the third quarter in a row. During the last quarter, it reported net income of 82 cents per share vs. Wall Street estimates of 62 cents per share, and in the quarter before, the company topped forecasts by 12 cents with a net income of 17 cents vs. consensus estimates of 5 cents per share.
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The current short interest as a percentage of the float for Expedia is pretty high at 10.9%. That means that out of the 101 million shares in the tradable float, 10.47 million shares are sold short by the bears. This is a decent short interest, so any positive earnings news could easily set off a large short squeeze post-earnings.
From a technical perspective, EXPE is currently trading above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock recently ran into some stiff resistance at around $60 to $59 a share, and shares have subsequently dropped back below its 50-day to its recent low of $51.41 a share. During that slide lower, shares of EXPE have been making lower highs and lower lows, which is bearish technical price action.
If you're bullish on EXPE, then I would wait until after its report and look for long-biased trades once it manages to break out above its 50-day at $54.53 a share, and then above some near-term overhead resistance at $56 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 3.1 million shares. If we get that action, then look for EXPE to re-test or possibly take out its next major overhead resistance levels at $59.90 to $60.29 a share post-earnings.
I would simply avoid EXPE or look for short-biased trades if after earnings it fails to trigger that breakout and then drops below some near-term support at $51.41 to $50.47 a share with heavy volume. If we get that move, then EXPE will setup to re-test or possibly take out its next major support levels at $43.56 to $43.44 a share.