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TheStreet Open House

5 Earnings Short Squeeze Plays to Trade

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

BroadSoft

My first earnings short-squeeze trade idea is BroadSoft (BSFT), which is set to release numbers on Monday after the market close. This company is a global provider of software that enables fixed-line, mobile and cable service providers to deliver voice and multimedia services over their Internet protocol-based, or IP-based, networks. Wall Street analysts, on average, expect BroadSoft to report revenue of $41.53 million on earnings of 32 cents per share.

This stock has been trending strongly so far in 2012, with shares up over 20%. Just recently, Oppenheimer upgraded this stock from perform to outperform and changed its price target to $44 per share.

From a technical perspective, BSFT 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 three months, with shares moving between $34.42 on the downside and $42.96 on the upside. A move outside of that range post-earnings will likely set up the next major trend for BSFT

If you're bullish on BSFT, then I would wait until after its report and look for long-biased trades once it manages to break out above some near-term overhead resistance levels at $39.59 to $42.96 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 718,819 shares. If we get that breakout, then look for BSFT to re-test or possibly take out its next major overhead resistance levels at $47.44 to $55.45 a share.

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