5 Earnings Short Squeeze Plays to Trade

I would avoid QUAD or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below some key near-term support levels at $18.35 to $17.58 a share with high volume. If we see that action, then QUAD will set up to re-test or possibly take out its next major support levels at $16.75 to $15.50 a share.

Tenet Healthcare

Another earnings short-squeeze trade candidate is Tenet Healthcare (THC), which is set to release numbers on Wednesday before the market open. This is an investor-owned health care services company whose subsidiaries and affiliates mainly operate acute care hospitals, ambulatory surgery centers, diagnostic imaging centers and related health care facilities. Wall Street analysts, on average, expect Tenet Healthcare to report revenue of $2.24 billion on earnings of 34 cents per share.

This company has beaten Wall Street estimates for the last two quarters in a row and its coming off a quarter were it beat estimates by 20 cents, after reporting net income of 40 cents per share against a mean estimate of 20 cents per share. During the first quarter, Tenet Healthcare beat Wall Street estimates by 20 cents with net income of 52 cents per share versus a mean estimate of 32 cents per share.

The current short interest as a percentage of the float for Tenet Healthcare is rather high at 8.3%. That means that out of the 88.34 million shares in the tradable float, 8.50 million shares are sold short by the bears. If the bulls get the news they're looking for from THC, then we could easily see a sharp short-covering rally develop post-earnings.

From a technical perspective, THC is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strongly for the last three months, with shares surging from a low of $17.24 to its recent high of $26.96 a share. During that uptrend, shares of THC have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed THC within range of triggering a near-term breakout trade post-earnings.

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