This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

5 Earnings Short-Squeeze Plays to Consider

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

Salesforce.com

My first earnings short-squeeze trade idea is Salesforce.com (CRM), which is set to release numbers on Tuesday after the market close. This company provides enterprise cloud computing and social enterprise solutions, and it's dedicated to helping customers transform themselves into social enterprises. Wall Street analysts, on average, expect Salesforce.com to report revenue of $776.52 million on earnings of 32 cents per share.

A William Blair analyst recently said that Salesforce.com could beat Wall Street estimates on both its top and bottom lines in the quarter. That William Blair analyst said that they believed Salesforce.com inked a sizable deal with a global sports apparel manufacturer during the quarter.

The current short interest as a percentage of the float for Salesforce.com is rather high at 11.7%. That means that out of the 127.54 million shares in the tradable float, 14.94 million shares are sold short by the bears. If Salesforce.com can beat earnings and raise guidance, then this stock could explode higher post-earnings.

From a technical perspective, CRM is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been trading sideways for the last month, with shares moving between $139.04 on the downside and $149.57 on the upside. A move outside of that range post-earnings will likely set up the next major trend for CRM.

If you're bullish on CRM, then I would wait until after its report and look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $149.57 to $150.20 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 1,947,780 shares. If that breakout triggers, then CRM will set up to re-test or possibly take out its next major overhead resistance levels at $155 to $159.85 a share.

I would simply avoid CRM or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 200-day moving average of $143.95 a share. If we get that action, then CRM will set up to re-test or possibly take out its next major support levels at $139.08 to $139.04 a share. Any high-volume move below those levels could send CRM back below $130 a share post-earnings.

2 of 7

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,067.56 -30.89 -0.18%
S&P 500 2,002.28 -1.09 -0.05%
NASDAQ 4,598.1880 +17.9170 0.39%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs