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5 Earnings Short-Squeeze Plays to Trade

Stocks in this article: SODA PANL CBOU KIOR SGEN

I would simply avoid PANL or look for short-biased trades if after earnings this stock fails to trigger that breakout, and then drops back below some near-term support at $30.82 to $30.36 a share with high volume. If we get that action, then PANL will set up to re-test or possibly take out its next major support levels at $28.04 to $26.09 a share.

Caribou Coffee

One potential earnings short-squeeze candidate is Caribou Coffee (CBOU), which is set to release numbers on Tuesday after the market close. This company is a branded premium coffee company across three reportable operating segments: Retail Coffeehouses, Commercial and Franchise. Wall Street analysts, on average, expect Caribou Coffee to report revenue of $74.99 million on earnings of 6 cents per share.

The current short interest as a percentage of the float for Caribou Coffee is rather high at 14.5%. That means that out of the 17.49 million shares in the tradable float, 2.81 million shares are sold short by the bears. If this company can manage to deliver the earnings news the bulls are looking for, then we could easily see a large short-squeeze develop post-earnings.

From a technical perspective, CBOU is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last month, with shares dropping from $14.95 to its recent low of $11.35 a share. During that sharp move lower, shares of CBOU have been consistently making lower highs and lower lows, which is bearish technical price action. That said, buying interest has recently hit the stock at around $11.35 a share.

If you're bullish on CBOU, then I would wait until after its report and look for long-biased trades if it can manage to break out above some key overhead resistance levels at $13.04 to $14.08 a share with high volume. Look for volume on that move that tracks in near or above its three-month average action of 291,010 shares. If we get that move, then CBOU will set up to re-test or possibly take out its next major overhead resistance levels at $14.95 to $17 a share.

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