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My final earnings short-squeeze trade idea is bed manufacturer and retailer
Select Comfort(SCSS - Get Report), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Select Comfort to report revenue of $230.04 million on earnings of 32 cents per share.
The current short interest as a percentage of the float for Select Comfort is rather high at 9%. That means that out of the 54.01 million shares in the tradable float, 4.86 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish earnings news could easily spark a monster short-squeeze for Select Comfort.
From a technical perspective, SCSS is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last two months, with shares moving higher from its low of $23.80 to its intraday high of $28.12 a share. During that uptrend, shares of SCSS have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed SCSS within range of triggering a major breakout trade post-earnings. If you're in the bull camp on SCSS, 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 $28.57 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 856,910 shares. If that breakout triggers, then SCSS will set up to re-test or possibly take out its next major overhead resistance level that sits just above $31 a share. Any high-volume move above $31 will then give SCSS a chance to re-fill a previous gap that started near $33 a share.
I would avoid SCSS or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 200-day at $27.48 and 50-day at $26.13 a share with heavy volume. If we get that move, then SCSS will set up to re-test or possibly take out its next major support levels at $24.11 to $23.80 a share.
To see more potential earnings short squeeze plays, check out the
Earnings Short Squeeze Plays portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.