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TheStreet Open House

5 Short-Squeeze Plays Primed for Quick Profits

If you're bullish on BWS, then I would wait until after its report and look for long-biased trades if this stock can manage to break out above its 50-day moving average at $15.89 and then above some near-term overhead resistance levels at $16.68 to $16.88 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 459,040 shares. If we get that breakout, then look for BWS to trend north of $20 a share post-earnings.

I would avoid BWS or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below some key near-term support at $14.77 a share with heavy volume. If we get that action, then BWS will set up to re-test or possibly take out its next major support levels at $13.62 to $13.16 a share.

Raven Industries

My final earnings short-squeeze trade idea is Raven Industries (RAVN), which is set to release numbers on Tuesday before the market open. This company manufactures various products for industrial, agricultural, energy, construction, and military/aerospace markets primarily in North America. Wall Street analysts, on average, expect Raven Industries to report revenue of $101.74 million on earnings of 34 cents per share.

If you're looking for a beaten-down heavily-shorted stock heading into its quarter, then make sure to check out shares of Raven Industries. This stock has been hammered by the bears during the last three months, with shares off by over 20%.

The current short interest as a percentage of the float for Raven Industries stands at 5.6%. That means that out of the 35.57 million shares in the tradable float, 1.98 million shares are sold short by the bears. The bears have been increasing their bets from the last reporting period by 17.4%, or by about 293,000 shares. If the bears are caught pressing their bets too hard into this report, then we could easily see a decent short-squeeze develop post-earnings.

From a technical perspective, RAVN is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last five months, with shares falling from its high of $37.60 to its recent low of $25.11 a share. During that downtrend, shares of RAVN have been consistently making lower highs and lower lows, which is bearish technical price action.

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