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5 Earnings Short-Squeeze Plays

Stocks in this article: PBY BIG MFRM P PLAB

I would avoid P 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 at $8.50 to $8 a share with heavy volume. If we get that action, then P will set up to re-test or possibly take out its next major support levels at $7.50 to $7.08 a share. Any move below $7.08 will then push P into new 52-week low territory, which is bearish technical price action.

Photronics

My final earnings short-squeeze play is Photronics (PLAB), which is set to release numbers on Tuesday after the market close. This company is a manufacturer of photomasks, which are high precision photographic quartz plates containing microscopic images of electronic circuits. Wall Street analysts, on average, expect Photronics to report revenue of $121.83 million on earnings of 16 cents per share.

The current short interest as a percentage of the float for Photronics is rather high at 11.6%. That means that out of the 58.80 million shares in the tradable float, 6.86 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 0.7%, or by about 50,000 shares. If the bears are caught pressing their bets too aggressively into this quarter, then this stock could easily rip higher post-earnings.

From a technical perspective, PLAB is currently trending right above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been downtrending for the last six months, with shares dropping from over $6.60 to a recent low of $4.56 a share. During that downtrend, shares of PLAB have been mostly making lower highs and lower lows, which is bearish technical price action. That said, shares of PLAB have recently rebounded off that low of $4.56 and its quickly moving within range of triggering a near-term breakout trade.

If you're in the bull camp on PLAB, then I would wait until after its report and look for long-biased trades as long as it's trending above its 50-day at $5.08, and then once it breaks out above $5.32 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 380,615 shares. If that breakout hits, then PLAB will set up to re-test or possibly take out its next major overhead resistance levels at $5.87 to $6.18 a share. Any high-volume move above $6.18 will then put $6.45 to $6.72 into focus for shares of PLAB.

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