I would simply avoid ADBE or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some near-term support levels at $35 to $34.50 a share with high volume. If we get that move, then ADBE will set up to re-test or possibly take out its next major support level at its 50-day moving average of $33.39 a share.
One potential earnings short-squeeze candidate is Restoration Hardware (RH - Get Report), which is set to release numbers on Wednesday after the market close. This company operates as a luxury brands in the home furnishings marketplace. Wall Street analysts, on average, expect Restoration Hardware to report revenue of $282.39 million on earnings of 4 cents per share.
Just recently, Robert W. Baird started coverage on shares of Restoration Hardware with an outperform rating and a $43 price target. The current short interest as a percentage of the float for Restoration Hardware is rather high at 11.9%. That means that out of the 30.82 million shares in the tradable float, 224,000 shares are sold short by the bears.From a technical perspective, RH has been uptrending strong since it came public back in early November, with shares soaring from around $30 to its recent high of $38.33 a share. During that uptrend, shares of RH have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed RH within range of triggering a near-term breakout trade post-earnings. If you're bullish on RH, then I would wait until after its report and look for long-biased trades once this stock breaks out above some near-term overhead resistance levels at $37.47 to $38.33 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 479,681 shares. If that breakout hits, then RH will set up to trade in new all-time territory, which is bullish technical rice action .Some possible targets are $40 to $45 a share. I would avoid RH 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 $35.49 to $35.30 a share with high volume. If we get that move, then RH will set up to re-test or possibly take out its next major support levels at $34 to $31.50 a share.