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TheStreet Open House

5 Heavily-Shorted Stocks Set to Report

I would simply avoid SNX or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 200-day moving average of $34.32 a share with high volume. If we get that move, then SNX will set up to re-test or possibly take out its next major support levels at $33.42 to its 50-day moving average at $33.01 a share.


One potential earnings short-squeeze candidate is Xyratex (XRTX), which is set to release numbers on Thursday after the market close. This company is a provider of modular enterprise-class data storage solutions and storage process technology. Wall Street analysts, on average, expect Xyratex to report revenue of $255.18 million on a loss of 32 cent per share.

If you're looking for a short-squeeze play that's been beaten down by the bears heading into its earnings report, then make sure to check out shares of Xyratex. This stock has been clobbered by the sellers during the last six months, with shares off by 38%.

The current short interest as a percentage of the float for Xyratex is notable at 5.6%. That means that out of the 20.12 million shares in the tradable float, 1.13 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a short-covering rally if the bulls get the earnings news they're looking for.

From a technical perspective, XRTX is currently trending above both its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently sold off from its high at $9.23 a share right to its 50-day moving average at $7.52 a share. If XRTX can hold above its 50-day moving average, then we could see a near-term breakout trade trigger post-earnings.

If you're bullish on XRTX, 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 levels at $8.70 to $9.23 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 391,311 shares. If that breakout triggers, then XRTX will set up to re-test or possibly take out its next major overhead resistance levels at $9.85 to $10.23 a share. Any move above $10.23 would then out $11.01 to $11.92 into focus for shares of XRTX.

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