If you're in the bull camp on FDS, 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 at $96.50 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 366,184 shares. If that breakout hits, then FDS will set up to re-test or possibly take out its next major overhead resistance levels at $101 to $104.46 a share.
I would simply avoid FDS 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 $93 to $92 a share with high volume. If we get that move, then FDS will set up to re-test or possibly take out its next major support levels at $90 to $86.80 a share.
One potential earnings short-squeeze candidate is Actuant (ATU - Get Report), which is set to release numbers on Wednesday before the market open. This company is a global manufacturer and marketer of a range of industrial products and systems. Wall Street analysts, on average, expect Actuant to report revenue of $396.37 million on earnings of 50 cents per share.This company has topped Wall Street estimates during the last four quarters and it's coming off a quarter where it beat by one cent, after reporting a profit of 55 cents per share against estimates of 54 cents per share. The current short interest as a percentage of the float for Actuant is pretty high at 9.8%. That means that out of the 67.45 million shares in the tradable float, 6.60 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 9.8%, or by about 591,000 shares. If the bears are caught pressing their bets too hard into this quarter, then we could see a decent short-covering rally post-earnings. From a technical perspective, ATU is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last month and change, with shares moving higher from a low of $25.38 a share to its recent high of $29.65 a share. During that uptrend, shares of ATU have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed ATU within range of triggering a near-term breakout trade post-earnings.
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