If you're bullish on HEI, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its gap down day high of $41.72 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 141,955 shares. If that breakout triggers, then HEI will set up to re-test or possibly take out its next major overhead resistance level at $43.86 a share. Any high-volume move above $43.86 will then put $46 into focus for shares of HEI.
I would avoid HEI 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 $40.31 to $40 a share with heavy volume. If we get that move, then HEI will set up to re-test or possibly take out its 50-day at $38.75 a share and its 200-day at $38.07 a share.
My final earnings short-squeeze play is Sanderson Farms (SAFM - Get Report), which is set to release numbers on Tuesday before the market open. This company is engaged in the production, processing, marketing and distribution of fresh and frozen chicken products. Wall Street analysts, on average, expect Sanderson Farms to report revenue of $635.75 million on earnings of 32 cents per share.The current short interest as a percentage of the float for Sanderson Farms stands at 6.4%. That means that out of the 17.77 million shares in the tradable float, 1.28 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough on a stock with a low float to spark a decent short-covering rally post-earnings. From a technical perspective, SAFM 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 two months and change, with shares moving higher from a low of $42.95 to its recent high of $50.46 a share. During that uptrend, shares of SAFM have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SAFM within range of triggering a major breakout trade post-earnings.