With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.
My first earnings short-squeeze trade is footwear producer, marketer and brand manager Deckers Outdoor (DECK), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Deckers Outdoor to report revenue of $623.02 million on earnings of $2.61 per share.Last quarter, Deckers Outdoor reported revenue of $376.4 million, and GAAP reported sales were 9.2% lower than the prior-year quarter's $414.4 million. Decker's EPS was $1.18, and GAAP EPS was 26% lower than the prior-year quarter's $1.59 per share. The current short interest as a percentage of the float for Deckers Outdoor is extremely high at 39.9%. That means that out of the 33.54 million shares in the tradable float, 13.4 million shares are sold short by the bears. This is a high short interest on a stock with a relatively low float. Any bullish earnings news could setup DECK for a monster short-squeeze post-earnings. From a technical perspective, DECK is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has pulled back recently from its high of $45.20 to its low of $40.15 a share. So far off that pullback, shares of DECK have held above its 50-day moving average of $39.50 a share. Despite this pullback, shares of DECK are still trending within range of triggering a near-term breakout trade post-earnings. If you're bullish on DECK, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 200-day moving average of $42.39 a share and then once it takes out some near-term overhead resistance at $45.20 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 2.33 million shares. If that breakout hits, then DECK will set up to re-test or possibly take out its next major overhead resistance levels at $49.61 to $51.65 a share. Any high-volume move above those levels will then put $55 into range for shares of DECK.