5 Heavily-Shorted Stocks About to Report Earnings

From a technical perspective, WGO 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 six months, with shares soaring from a low of $9.52 to a recent high of $14.49 a share. During that uptrend, shares of WGO have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed WGO within range of triggering a near-term breakout trade post-earnings.

If you're bullish on WGO, 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 $14.49 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 208,858 shares. If that breakout hits, then WGO will set up to re-test or possibly take out its next major overhead resistance levels at $16 to $16.60 a share. Any high-volume move above $16.60 a share will then put $18 to $20 into focus for shares of WGO.

I would avoid WGO or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day at $13.24 a share with heavy volume. If we get that move, then WGO will set up to re-test or possibly take out its next major support levels at $12.73 to $12 a share. Any high-volume move below $12 will then put $11 into focus for shares of WGO.

CarMax

My final earnings short-squeeze play is CarMax (KMX), which is set to release numbers on Thursday before the market open. This is a retailer of used vehicles in the United States. It also sells new vehicles under franchise agreements with four new car manufacturers (Chrysler, General Motors, Nissan and Toyota). Wall Street analysts, on average, expect CarMax to report revenue of $2.46 billion on earnings of 39 cents per share.

During the last quarter, this company missed Wall Street estimates by 4 cents per share after coming in at a net income of 48 cents per share versus estimates of 52 cents per share. The company fell in line with expectations during the first quarter. On the top line, CarMax is looking to register its fifth straight quarter in a row of revenue increases heading into this quarter.

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