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Another potential earnings short-squeeze trade is
First Solar(FSLR - Get Report), which is set to release its numbers on Thursday after the market close. This company manufactures and sells solar modules with an advanced thin-film semiconductor technology, and it designs, constructs, and sells photovoltaic solar power systems. Wall Street analysts, on average, expect First Solar to report revenue of $966.50 million on earnings of $1.04 per share.
This stock has been uptrending very strong for the last three months, with shares up a whopping 54%. Despite that strength, shares of FSLR are still trading well off its 52-week high of $54.81 a share ahead of its report.
The current short interest as a percentage of the float for First Solar is extremely high at 49.6%. That means that out of the 60.17 million shares in the tradable float, 29.80 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.2%, or by about 1.2 million shares. If the bears are caught leaning too hard into this quarter, then we could easily see an explosive short squeeze develop post-earnings.
From a technical perspective, FSLR is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending extremely strong for the last three months, with shares rising from a low of $13.81 to its recent high of $26.31 a share. During that uptrend, shares of FSLR have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed FSLR within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on FSLR, then I would wait until after its report and look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $25.94 to $26.31 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 7.7 million shares. If we get that move, then FSLR will set up to re-test or possibly take out its next major overhead resistance levels at $29.63 to $32.50 a share.
I would simply avoid FSLR or look for short-biased trades if after earnings this stock fails to trigger that breakout, and then drops back below some near-term support at $22.56 a share with high volume. If we get that move, then FSLR will set up to re-test or possibly take out its next major support levels at $19.68 to $18.30 a share.
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