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Another earnings short-squeeze play is biotechnology and drugs player
Theravance(THRX), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Theravance to report revenue of $3.88 million on a loss of 42 cents per share.
If you're looking for a heavily-shorted stock that's been beaten down noticeably heading into its quarterly report, then make sure to check out shares of Theravance. This stock is off by 15% during the last six months, and it's currently trading about six points above its 52-week low of $15.69 a share.
The current short interest as a percentage of the float for Theravance is notable at 11.5%. That means that out of the 54.52 million shares in the tradable float, 7.93 million shares are sold short by the bears. Any bullish earnings news could easily spark a sharp short-covering rally for shares of THRX post-earnings.
From a technical perspective, THRX is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has started to flirt with its 50-day moving average of $22.03 today, since shares have hit an intraday high of $22.33 a share. That move is quickly pushing the stock within range of triggering a near-term breakout trade post-earnings.
If you're bullish on THRX, 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 $22.96 to $23.57 a share and then once it clears more resistance at $23.86 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 614,331 shares. If that breakout triggers, then THRX will set up to re-test or possibly take out its next major overhead resistance levels at $25.67 to $27.52 a share.
I would avoid THRX 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 at $21.75 a share with high volume. If we get that move, then THRX will set up to re-test or possibly take out its next major support levels at $19.98 to $19.61 a share. Any high-volume move below $19.61 will then put $18 to $17.06 into range for shares of THRX.