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5 Earnings Short-Squeeze Plays to Consider

During the last quarter, this company missed Wall Street estimates by 33 cents per share, coming in at a net income of $1.98 per share versus estimates of $2.31 per share. That miss was due to a mix of global sluggishness and production woes at home related to its new line of combines. In the second quarter, this company beat Wall Street estimates by 7 cents per share.

The current short interest as a percentage of the float for Deere & Co. stands at 2.8%. That means that out of the 365.46 million shares in the tradable float, 10.93 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a decent short-covering rally if Deere & Co. reports a solid quarter and raises forward guidance.

From a technical perspective, DE is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strongly for the last three months, with shares soaring from a low of $72.73 to a recent high of $87.50 a share. During that uptrend, shares of DE have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed DE within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on DE, then I would wait until after its report and look for long-biased trades once this stock manages to take out some key overhead resistance levels at $87.50 to $88.16 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3,409,100 shares. If that breakout triggers, then DE will set up to re-test or possibly take out its next major overhead resistance levels at $92.50 to $95 a share.

I would simply avoid DE or look for short-biased trades if after earnings it fails to trigger that breakout, and then moves back below some key support levels at $83.31 to $82 a share with heavy volume. If we get that action, then DE will set up to re-test or possibly take out its next major support levels at $80 to $79.36 a share post-earnings.

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