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Another potential earnings short-squeeze trade play is domestic producer of commercial silica
U.S. Silica(SLCA - Get Report), which is set to release its numbers on Wednesday after the market close. Wall Street analysts, on average, expect U.S. Silica to report revenue of $108.73 million on earnings of 32 cents per share.
If you're looking for a heavily-shorted stock that's trending strong heading into its quarterly report, then make sure to check out shares of U.S. Silica. This stock has been on fire during the last six months, with shares exploding higher by 104%.
The current short interest as a percentage of the float for U.S. Silica is extremely high at 43.9%. That means that out of the 11.57 million shares in the tradable float, 5.49 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 3.6%, or by about 191,000 shares. If the bears are caught pushing their luck too strong into a solid quarter, then we could easily see a monster short-squeeze develop for shares of SLCA post-earnings.
From a technical perspective, SLCA 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 six months, with shares soaring from its low of $9.27 to its recent high of $20.30 a share. During that uptrend, shares of SLCA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SLCA within range of triggering a major breakout trade post-earnings.
If you're in the bull camp on SLCA, 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 $20.30 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 501,518 shares. If that breakout hits, then SLCA will set up to re-test or possibly take out its all-time high at $22.14 a share. If that level gets taken out with volume, then SLCA could hit $25 to $28 a share post-earnings.
I would simply avoid SLCA 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 $19 to $17.71 a share with high volume. If we get that move, then SLCA will set up to re-test or possibly take out its 50-day moving average of $16.55 a share.