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5 Heavily-Shorted Earnings Plays

If you're in the bull camp on SPLK, then I would wait until after its report and look for long-biased trades once it manages to take out some near-term overhead resistance levels at $29 to $29.23 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1,038,110 shares. If that breakout triggers, then SPLK will set up to re-test or possibly take out its next major overhead resistance levels at $31.63 to $32.78 a share. Any high-volume move above those levels will then put $35 into focus for shares of SPLK.

I would simply avoid SPLK or look for short-biased trades if after earnings it fails to trigger that breakout, and then moves back below some key near-term support levels at $27 to $26.10 a share with heavy volume. If we get that action, then SPLK will set up to re-test or possibly take out its 52-week low of $25.15 a share. Any move below that level should be considered bearish price action, since it's also the all-time low for shares of SPLK.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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