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TheStreet Open House

5 Earnings Short-Squeeze Plays

>>5 Dividend Stocks Set to Give Shareholders a Raise

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

Home Inns & Hotels Management

My first earnings short-squeeze play is Home Inns & Hotels Management (HMIN), which is set to release numbers on Tuesday after the market close. This company develops, leases, operates, franchisees, and manages a chain of hotels in the People's Republic of China. Wall Street analysts, on average, expect Home Inns & Hotels Management to report revenue of $232.18 million on earnings of 37 cents per share.

This stock has been uptrending very strong over the last three months, with shares up sharply by 29%. This move has pushed shares of Home Inns & Hotels Management within seven points of its 52-week high of $35.89 a share ahead of its earnings report.

The current short interest as a percentage of the float for Home Inns & Hotels Management is pretty high at 10%. That means that out of the 31.62 million shares in the tradable float, 3.11 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish earnings news and guidance could send this stock soaring higher post-earnings.

From a technical perspective, HMIN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last four months, with shares soaring from a low of $16.32 to its recent high of $29.67 a share. During that uptrend, shares of HMIN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed HMIN within range of triggering a near-term breakout trade post-earnings.

If you're bullish on HMIN, 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 $29.67 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 242,987 shares. If we get that breakout, then look for HMIN to re-test or possibly take out its next major overhead resistance levels at $32.95 to $33.27 a share. Any high-volume move above those levels will then put the 52-week high of $35.89 a share into focus for HMIN.

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