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My final earnings short-squeeze trade idea is specialty retailer of nutritional supplements
GNC(GNC - Get Report), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect GNC to report revenue of $574.72 million on earnings of 46 cents per share.
During the last quarter, this company reported revenue of $621.6 million and GAAP reported sales were 16% higher than the prior-year quarter's $538 million. Last quarter, non-GAAP EPS was 61 cents per share and GAAP EPS was 60 cents per share, which was 33% higher than the prior-year quarter's 45 cents per share.
The current short interest as a percentage of the float for GNC sits at 8.9%. That means that out of the 98.83 million shares in the tradable float, 9.1 million shares are sold short by the bears. This isn't a huge short interest, but its more than enough to send shares of GNC soaring higher post-earnings if the company can deliver the numbers the bulls are looking for.
From a technical perspective, GNC is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently spiked back above its 50-day moving average with strong upside volume flows. That move has started to push shares of GNC within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on GNC, 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 $36.95 to $37.26 a share and then once it takes out more resistance at $37.96 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.8 million shares. If that breakout triggers, then GNC will set up to re-test or possibly take out its next major overhead resistance levels at $41.22 to $42.70 a share. Any high-volume move above $42.70 a share would then push GNC into new 52-week high territory, which is bullish price action.
I would simply avoid GNC or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average of $34.66 a share with high volume. If we get that move, then GNC will set up to re-test or possibly take out its next major support levels at $32.94 to $30.92 a share.
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.