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Another earnings short-squeeze play is datacenter solutions provider
Fusion-IO(FIO), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Fusion-IO to report revenue of $120.31 million on earnings of 8 cents per share.
During the last quarter, this company reported revenue of $118.1 million and its GAAP reported sales were 59% higher than the prior-year quarter's $74.4 million. This stock is trending poorly ahead of the quarter, since shares are off by 14.2% during the last three months.
The current short interest as a percentage of the float for Fusion-IO is very high at 32.30%. That means that out of the 77.29 million shares in the tradable float, 20.76 million shares are sold short by the bears. If Fusion-IO can deliver the earnings news the bulls are looking for, then this stock could explode higher since its beaten-down and so heavily-shorted.
From a technical perspective, FIO is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last four months, with shares falling from its high of $32.63 to its recent low of $18.85 a share. During that plunge, shares of FIO have been mostly making lower highs and lower lows, which is bearish technical price action. That said, shares of FIO have just started to rebound off that $18.85 low and move within range of triggering a near-term breakout trade.
If you're bullish on FIO, 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 $21.52 to its 50-day moving average at $22.32 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.9 million shares. If that breakout triggers, then FIO will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $23.77 to $25 a share. Any high-volume move above $25 will then put $28 to $30 into focus for shares of FIO.
I would avoid FIO 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 $19.85 to $18.85 a share with heavy volume. If we get that move, then FIO will set up to re-test or possibly take out its 52-week low of $17.45 a share. Any move below $17.45 will then push FIO into new 52-week low territory, which is bearish technical price action.