5 Earnings Short-Squeeze Plays to Trade

Universal Display

Another potential earnings short-squeeze play is Universal Display (PANL), which is set to release its numbers on Wednesday after the market close. This company is engaged in the research, development and commercialization of organic light emitting diode, or OLED, technologies and materials. Wall Street analysts, on average, expect Universal Display to report revenue of $18.87 million on earnings of 5 cents per share.

During the last quarter, this company reported revenue of $30 million. Its GAAP reported sales were much higher than the previous year quarter's $11.3 million. This stock is trending lower heading into the quarter, with shares off by 20% in the last six months.

The current short interest as a percentage of the float for Universal Display is very high at 25.6%. That means that out of the 35.51 million shares in the tradable float, 10.09 million shares are sold short by the bears. This stock sports a relatively low float and high short interest. Any bullish earnings news could spark a sharp short-covering rally post-earnings.

From a technical perspective, PANL is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending sharply for the last two months, with shares falling from $44.42 to a recent low of $30.82 a share. During that drop, shares of PANL have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of PANL have recently found some buying interest at around $30.80 a share.

If you're in the bull camp on PANL, 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 at $34.54 to $36.73 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 856,743 shares. If that breakout triggers, then PANL will set up to re-test or possibly take out its next major overhead resistance levels at $40 to $42 a share or possibly even $44.42 a share.

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