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Another potential earnings short-squeeze trade is biopharmaceutical player
Vivus(VVUS - Get Report), which is set to release its numbers on Monday after the market close. Wall Street analysts, on average, expect Vivus to report revenue of $3.09 million on a loss of 44 cents per share.
If you're looking for a heavily shorted stock that's been beaten-down by the sellers ahead of its earnings report this week, then check out shares of Vivus has been hammered during the last six months, with shares down by 41%.
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The current short interest as a percentage of the float for Vivus is extremely high at 24%. That means that out of the 82.19 million shares in the tradable float, 24.02 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.7%, or by about 405,000 shares. If the sellers are caught leaning too hard into a bullish quarter, then shares of VVUS could see a decent short-squeeze post-earnings.
From a technical perspective, VVUS is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trading sideways for the last month and change, with shares moving between $11.89 on the downside and $13.96 on the upside. A high-volume move above the upper-end of that recent range could trigger a near-term breakout trade for shares of VVUS post-earnings.
If you're in the bull camp on VVUS, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day at $13.23 a share and then once it clears more near-term overhead resistance levels at $13.96 to $15.54 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 4.14 million shares. If that breakout hits, then VVUS will set up to re-test or possibly take out its 200-day moving average of $18.99 a share.
I would simply avoid VVUS 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 $12.14 to $11.89 a share with high volume. If we get that move, then VVUS will set up to re-test or possibly take out its next major support levels at $10.32 to $9.86 a share.