If you're bullish on THC, 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 $25.60 to $26.96 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 2,219,780 shares. If we get that breakout, then look for THC to re-test or possibly take out its next major overhead resistance levels at $28 to $30 a share.
I would avoid THC 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 $23.46 to $22.86 a share with heavy volume. If we see that action, then THC will set up to re-test or possibly take out its 200-day moving average of $21.32 a share post-earnings.
My final earnings short-squeeze trade idea is Mako Surgical (MAKO), which is set to release numbers on Wednesday after the market close. This is a medical device company that markets its advanced robotic arm solution and orthopedic implants for orthopedic procedures. Wall Street analysts, on average, expect Mako Surgical to report revenue of $27.39 million on a loss of 16 cents per share.Just this morning, Summer Street has upgraded this stock to buy from neutral with a $25 price target ahead of the company's third quarter results citing low expectations. The current short interest as a percentage of the float for Mako Surgical is extremely high at 34.9%. That means that out of the 37.67 million shares in the tradable float, 13.05 million shares are sold short by the bears. From a technical perspective, MAKO is currently trading below both its 50-day and 200-day moving averages, which is bearish. During the last two months, shares of MAKO have been trending sideways between $14.18 on the downside and $19.62 on the upside. A high-volume move outside of that range post-earnings will likely set up the next major trend for MAKO. If you're in the bull camp on MAKO, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $16.28 to $16.90 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1,184,400 shares. If we get that breakout, then look for MAKO to re-test or possibly take out its recent high of $19.62 a share.