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Another earnings short-squeeze play is biotechnology and drugs player
Theravance(THRX - Get Report), 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.