My first earnings short-squeeze trade idea is semiconductor materials manufacturer Cree (CREE), 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.
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