If you're bullish on AEO, then I would wait until after its report and look for long-biased trades if this stock can manage to break out above some near-term overhead resistance levels at $20.46 to its 50-day at $21.04 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3,826,510 shares. If that breakout hits, then AEO will set up to re-test or possibly take out its next major overhead resistance level at $22.97 to $23.94 a share.
I would avoid AEO or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels at $18.35 to $18.31 a share with heavy volume. If we get that action, then AEO will set up to re-test or possibly take out its next major support levels at $18.09 to $17.04 a share. Any move below $17.04 a share will then put $15 into focus for shares of AEO.
My final earnings short-squeeze play is Express (EXPR - Get Report), which is set to release numbers on Wednesday before the market open. This is a specialty apparel and accessories retailer of women's and men's merchandise, targeting the 20 to 30 year old customer. Wall Street analysts, on average, expect Express to report revenue of $468.80 million on earnings of 17 cents per share.On Friday, UBS analyst Roxanne Meyers said that if she had to sum up who the early morning Black Friday winners were that saw the most store traffic, it would be Express, Victoria's Secret (LTD), Urban Outfitters (URBN) and American Eagle Outfitters. The current short interest as a percentage of the float for Express is rather high at 8.4%. That means that out of the 83.30 million shares in the tradable float, 7.17 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.6%, or by about 377,000 shares. If the bears are caught pressing their bets too aggressively into this quarter, then this stock could easily explode higher post-earnings.
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