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5 Heavily-Shorted Stocks Set to Report

I would avoid XRTX 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 $7.52 to $7.40 a share with high volume. If we get that move, then XRTX will set up to re-test or possibly take out its next major support levels at $7.16 to $6.50 a share.

Pricesmart

Another earnings short-squeeze trade idea is Pricesmart (PSMT), which is set to release numbers on Wednesday after the market close. This company is engaged in the ownership and operation of membership shopping warehouse clubs under the trade name 'PriceSmart' in Central America and the Caribbean. Wall Street analysts, on average, expect Pricesmart to report revenue of $535.38 million on earnings of 62 cents per share.

The average Wall Street estimate for Pricesmart is predicting that revenue will increase by 15.1% and EPS will expand by 29.8% for this quarter. During the last quarter, EPS was 58 cents per share, which was 38% higher than the prior-year quarter's 42 cents per share.

The current short interest as a percentage of the float for Pricesmart is rather high at 10.2%. That means that out of the 20.56 million shares in the tradable float, 1.90 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2%, or by about 37,000 shares. If the bears are caught pressing their bets into this quarter, then we could see a sizable short-squeeze develop post-earnings.

From a technical perspective, PSMT 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 trending sideways for the last two months, with shares moving between $70.09 on the downside and $79.93 on the upside. A move outside of that range post-earnings will likely lead to the next major trend for shares of PSMT.

If you're bullish on PSMT, 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 $79.24 to $79.93 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 123,785 shares. If that breakout triggers, then PSMT will set up to re-test or possibly take out its next major overhead resistance levels at $83.84 to $85.67 a share.

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