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One potential earnings short-squeeze candidate is manufacturer of carbon fibers and technical fibers
Zoltek(ZOLT), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Zoltek to report revenue of $42 million on earnings of 13 cents per share.
If you're looking for a heavily shorted stock that's uptrending heading into its earnings report, then make sure to check out shares of Zoltek Companies. This stock has been trending up during the last three months, with shares higher by 13.6%.
The current short interest as a percentage of the float for Zoltek Companies is extremely high at 21.5%. That means that out of the 27.48 million shares in the tradable float, 5.91 million shares are sold short by the bears. Any bullish earnings news could easily spark a solid short-covering rally for shares of Zoltek post-earnings.
From a technical perspective, ZOLT is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last three months, with shares soaring from its low of $6.03 a share to its recent high of $8.60 a share. During that uptrend, shares of ZOLT have been consistently making higher lows and higher highs, which is bullish technical price action. That move has pushed ZOLT within range of triggering a major breakout trade post-earnings.
If you're bullish on ZOLT, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $8.60 to $9.17 a share and then once it clears more overhead resistance at $9.61 to $9.66 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 256,825 shares. If that breakout hits, then ZOLT will set up to re-test or possibly take out its next major overhead resistance levels at $11.41 to $12.10 a share.
I would avoid ZOLT 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 $7.73 to $7.29 a share with high volume. If we get that move, then ZOLT will set up to re-test or possibly take out its next major support levels at $7 to $6.66 a share. Any high-volume move below $6.66 will then put $6.03 into range for shares of ZOLT.