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Another earnings short-squeeze trade candidate is semiconductor player
Cirrus Logic(CRUS - Get Report), which is set to release numbers on Wednesday after the market close. This company develops analog and mixed-signal integrated circuits for a range of audio and energy markets. Wall Street analysts, on average, expect Cirrus Logic to report revenue of $181 million on earnings of 71 cents per share.
This company gets about 60% of its revenue from Apple, so it could be on tap for a decent quarter. A Canaccord Genuity analyst recently said that inventory buildup at Cirrus suggests revenue growth in the December quarter will likely be well above the consensus view.
The current short interest as a percentage of the float for Cirrus Logic is rather high at 10.3%. That means that out of the 64.17 million shares in the tradable float, 6.58 million shares are sold short by the bears. If the bulls get the news they're looking for from CRUS, then we could easily see a sharp short-covering rally develop post-earnings.
From a technical perspective, CRUS is currently trading above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways for the last month and change, with shares moving between $36.32 on the downside and $41.45 on the upside. A move outside of that trading pattern post-earnings will likely setup the next major trend for CRUS.
If you're bullish on CRUS, 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 $40.47 to $41.45 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.8 million shares. If we get that move, then look for CRUS to re-test or possibly take out its next major overhead resistance levels at $44 to $45.49 a share. Any high-volume move above those levels post-earnings will likely send CRUS to $50 or higher.
I would avoid CRUS or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below some key near-term support at $38.75 to $36.32 a share with heavy volume. If we get that action, then CRUS will set up to re-fill its previous gap up zone that started at around $30 a share.