5 Heavy Shorts About to Report Earnings

I would avoid GBX 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 at $15.41 a share with heavy volume. If we get that move, then GBX will set up to re-fill its previous gap from November that started around $13.50 a share.

Alcoa

My final earnings short-squeeze candidate is Alcoa (AA), which is set to release numbers on Tuesday after the market close. This company is engaged in the production and management of primary aluminum, fabricated aluminum, and alumina combined, through its active and growing participation in all major aspects of the industry: technology, mining, refining. Wall Street analysts, on average, expect Alcoa to report revenue of $5.61 billion on earnings of 6 cents per share.

This company beat Wall Street estimates the last quarter after reporting in line estimates during the prior quarter. During the third quarter, it reported a profit of 3 cents per share versus Wall Street estimates of 0 cents per share. Two quarters ago, it reported a profit of 6 cents per share.

The current short interest as a percentage of the float for Alcoa sits at 6.8%. That means that out of the 1.07 billion shares in the tradable float, 72.01 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a solid short-covering rally post-earnings.

From a technical perspective, AA 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 from a low of $7.98 to its recent high of $9.29 a share. During that uptrend, shares of AA have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed AA within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on AA, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $9.29 to $9.31 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 16,393,100 shares. If that breakout hits, then AA will set up to re-test or possibly take out its next major overhead resistance levels at $9.90 to $10.64 a share.

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