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5 Stocks Set to Soar on Bullish Earnings


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My final earnings short-squeeze trade idea is rent-to-own operator in North America Rent-A-Center (RCII - Get Report), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Rent-A-Center to report revenue of $777.51 million on earnings of 83 cents per share.

During the last quarter, this company reported net income of 67 cents per share versus Wall Street estimates of 67 cents per share. This comes after two consecutive quarters where Rent-A-Center topped Wall Street estimates.

The current short interest as a percentage of the float for Rent-A-Center stands is pretty high at 10.8%. That means that out of the 57.09 million shares in the tradable float, 6.21 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 14.9%, or by about 805,000 shares. If the short-sellers are caught leaning too hard into a bullish quarter, then shares of RCII could skyrocket post-earnings.

From a technical perspective, RCII is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending decent for the last month, with shares trading up from its low of $32.93 to its recent high of $35.55 a share. During that move, shares of RCII have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of RCII within range of triggering a near-term breakout trade.

If you're in the bull camp on RCII, 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 $35.55 to $36.50 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 421,338 shares. If that breakout hits, then RCII will set up to re-test or possibly take out its next major overhead resistance level at $37.41 to $38 a share. Any high-volume move above $38 will then put $40 or higher into range for shares of RCII.

I would avoid RCII or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below today's low of $34.37 a share with high volume. If we get that move, then RCII will set up to re-test or possibly take out its next major support levels at $32.93 to $32.45 a share. Any move below $32.45 will then put $31 into range for shares of RCII.

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.


Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including and . You can follow Pedone on Twitter at or @zerosum24.
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FIO $0.00 0.00%
ILMN $135.75 -2.05%
SLCA $26.14 -1.69%
RCII $13.70 -12.79%
STX $26.90 -1.61%


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