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Another earnings short-squeeze play is directory services and social networking website operator
Yelp!(YELP - Get Report), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Yelp to report revenue of $40.29 million on a loss of 4 cents per share.
The current short interest as a percentage of the float for Yelp is extremely high at 27.3%. That means that out of the 23.51 million shares in the tradable float, 4.62 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.4%, or by about 64,000 shares. If the bears are caught pressing their bets into a strong quarter, then shares of YELP could easily see a monster short-squeeze develop post-earnings.
From a technical perspective, YELP 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 moving higher from its low of $16.32 to its recent high of $22.44 a share. During that uptrend, shares of YELP have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of YELP within range of triggering a near-term breakout trade post-earnings.
If you're bullish on YELP, 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 $21.67 to $22.44 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.1 million shares. If that breakout triggers, then YELP will set up to re-test or possibly take out its next major overhead resistance levels at $24.51 to $26 a share. Any high-volume move above $26 will then put $27.65 to $28 into focus for shares of YELP.
I would avoid YELP 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 $20.10 to $19.45 a share with high volume. If we get that move, then YELP will set up to re-test or possibly take out its next major support levels at $17.90 to $17.48 a share. Any high-volume move below $17.48 will then put $16.32 into range for shares of YELP.