With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.
Research In Motion
My first earnings short-squeeze play is Research In Motion (RIMM), which is set to release numbers on Thursday after the market close. This company designs, manufactures, and markets wireless solutions for the mobile communications market worldwide. It provides platforms and solutions for access to information, including email, voice, instant messaging. Wall Street analysts, on average, expect Research In Motion to report revenue of $2.65 billion on a loss of 35 cents per share.If you're looking for a heavily-shorted stock that's been uptrending very strong heading into its earnings report, then make sure to check out shares of Research In Motion. This stock has been on fire during the last three months, with shares soaring by over 80%. The current short interest as a percentage of the float for Research In Motion is extremely high at 24.3%. That means that out of the 486.37 million shares in the tradable float, 113.69 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 9.1%, or by about 9.49 million shares. If the bears are caught pressing their bets too hard into this quarter, then we could easily see a monster short-squeeze develop for shares of RIMM. From a technical perspective, RIMM 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 three months, with shares soaring from a low of $6.22 to a recent high of $14.21 a share. During that uptrend, shares of RIMM have been consistently making higher lows and higher highs, which is bullish price action. That move has now pushed RIMM within range of triggering a major breakout trade post-earnings. If you're bullish on RIMM, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $14.21 to $14.99 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 34,476,100 shares. If that breakout triggers, then RIMM will set up to re-test or possibly take out its next major overhead resistance levels at $17.96 to $19.95 a share.