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TheStreet Open House

5 Short-Squeeze Plays for Profit

Stock quotes in this article: FRAN, BRLI, TITN, FNSR, LULU

If you're in the bull camp on BRLI, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $27.19 to $29.24 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 316,698 shares. If that breakout hits, then BRLI will set up to re-test or possibly take out its next major overhead resistance levels at $32 to $32.86 a share. Any move above $32.86 a share will then push shares of BRLI into new 52-week high territory, which is bullish technical price action.

I would simply avoid BRLI 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 $25.24 a share with heavy volume. If we get that action, then BRLI will set up to re-test or possibly take out its next major support levels at $24.82 to $23.66 a share. Any move below $23.66 will then put $20 a share into for shares of BRLI.

Titan Machinery

One potential earnings short-squeeze candidate is Titan Machinery (TITN), which is set to release numbers on Thursday before the market open. This company owns and operates a network of service agricultural and construction equipment stores in the U.S. and Europe. Wall Street analysts, on average, expect Titan Machinery to report revenue of $512.76 million on earnings of 65 cents per share.

If you're looking for a heavily-shorted stock that's been crushed by the bears heading into its quarter, then make sure to check out shares of Titan Machinery. This stock has been hammered by the sellers during the last six months, with shares off by 22%.

The current short interest as a percentage of the float for Titan Machinery is extremely high at 29.1%. That means that out of the 16.84 million shares in the tradable float, 4.98 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 10.2%, or by around 458,000 shares. If the bears are caught pressing their bets too hard into this quarter, then we could easily see an explosive short-squeeze hit the tape post-earnings.

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