I would avoid SCHN 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 $31 to $29.05 a share with high volume. If we get that move, then SCHN will set up to re-test or possibly take out its next major support levels at $28 to $27.50 a share.
Another earnings short-squeeze play is
(GBX - Get Report)
, which is set to release numbers on Wednesday before the market open. This company designs, manufactures and markets railroad freight car equipment in North America and Europe. Wall Street analysts, on average, expect Greenbrier Companies to report revenue of $400.42 million on earnings of 31 cents per share.
This stock recently sold off hard from its high of $21.63 to its recent low of $15.41 a share with heavy downside volume. Following that move, shares of GBX have started to stabilize at around $16 a share ahead of its quarterly report.
The current short interest as a percentage of the float for Greenbrier Companies is pretty high at 12.5%. That means that out of the 22.28 million shares in the tradable float, 3.05 million shares are sold short by the bears. This is a high short interest on a stock with a very low tradable float. Any bullish earnings news could spark a monster short-squeeze for GBX post-earnings.
From a technical perspective, GBX is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been uptrending slightly since its recent selloff, with shares moving from a low of $15.41 to its recent high of $16.79 a share. That move has started to push GBX within range of triggering a near-term breakout trade post-earnings.
If you're bullish on GBX, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 200-day moving average at $16.49 and its 50-day moving average of $17.19 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 745,575 shares. If that breakout triggers, then GBX will set up to re-test or possibly take out its next major overhead resistance levels at $20 to $21.63 a share.