5 Heavy Shorts About to Report Earnings

I would simply avoid APOL 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 $20.13 to $19.91 a share with high volume. If we get that move, then APOL will set up to re-test or possibly take out its next major support levels at $19 to $18.36 a share. Any move below $18.36 would then push APOL into new 52-week low territory, which is bearish technical price action.

Schnitzer Steel Industries

One potential earnings short-squeeze trade idea is Schnitzer Steel Industries (SCHN), which is set to release numbers on Tuesday before the market open. This company is a recycler of ferrous and nonferrous scrap metal, a recycler of used and salvaged vehicles and a manufacturer of finished steel products. Wall Street analysts, on average, expect Schnitzer Steel Industries to report revenue of $616.80 million on earnings of 1 cent per share.

This company has beaten Wall Street estimates for the last three quarters in a row. During the last quarter, this company reported a profit of 10 cents per share versus a mean estimate of one cent per share.

The current short interest as a percentage of the float for Schnitzer Steel Industries is notable at 8.5%. That means that out of the 25.25 million shares in the tradable float, 2.05 million shares are sold short by the bears. If this company can give the bulls the earnings news they're looking for, then we could get see this stock rip higher post-earnings.

From a technical perspective, SCHN is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strongly for the last two months, with shares moving higher from a low of $25.99 to its recent high of $32.71 a share. During that uptrend, shares of SCHN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed SCHN within range of triggering a major breakout trade post-earnings.

If you're bullish on SCHN, 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 $32.71 to $32.74 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 312,995 shares. If that breakout triggers, then SCHN will set up to re-test or possibly take out its next major overhead resistance levels at $36 to $38 a share.

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