5 Earnings-Related Short-Squeeze Plays

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With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Finish Line

My first earnings short-squeeze trade idea is Finish Line (FINL), which is set to release numbers on Friday before the market open. This is an athletic footwear store offering large selection of men's, women's and kids' performance and athletic casual shoes, as well as an assortment of apparel and accessories. Wall Street analysts, on average, expect Finish Line to report revenue of $296.67 million on earnings of 10 cents per share.

The current short interest as a percentage of the float for Finish Line sits at 5.8%. That means that out of the 49.10 million shares in the tradable float, 2.91 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a decent short-covering rally post-earnings.

From a technical perspective, FINL is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last four months, with shares dropping from a high of $23.42 to its recent low of $17.41 a share. During that move, shares of FINL have been mostly making lower highs and lower lows, which is bearish technical price action. That said, shares of FINL have started to bounce off that $17.41 low and move within range of triggering a near-term breakout trade.

If you're bullish on FINL, 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 $18.97 to its 50-day moving average at $20.01 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 709,962 shares. If that breakout triggers, then FINL will set up to re-test or possibly take out its next major overhead resistance levels at $21.21 to $21.43 a share. Any high-volume move above those levels and more resistance at $21.51 will then put $23 to $23.50 into focus for shares of FINL.

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