My first earnings short-squeeze trade idea is semiconductor materials manufacturer Cree (CREE - Get Report), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Cree to report revenue of $331.20 million on earnings of 30 cents per share.
During the last quarter, this company reported a profit of 18 cents per share versus a mean estimate of 18 cents per shares. This comes after two consecutive quarter of beating Wall Street estimates. Cree has averaged year-over-year revenue growth of 23% over the last four quarters.The current short interest as a percentage of the float for Cree is rather high at 14.6%. That means that out of the 113.65 million shares in the tradable float, 16.66 million shares are sold short by the bears. From a technical perspective, CREE is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently formed a triple top at around $35 a share. Following that top, shares of CREE traded down to its recent low of $31.22 a share. This stock has now started to move back above its 50-day moving average of $32.63 and its quickly moving within range of triggering a near-term breakout trade post-earnings. If you're bullish on CREE, 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 at $35.12 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.5 million shares. If that breakout hits, then CREE will set up to re-test or possibly take out its next major overhead resistance level at $37.30 a share. Any high-volume move above $37.30 will then put $40 to $45 into range for shares of CREE. I would simply avoid CREE 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 its 50-day of $32.63 and then $31.22 a share with heavy volume. If we get that move, then CREE will set up to re-test or possibly take out its next major support level at its 200-day moving average of $28.55 a share.