Another potential earnings short-squeeze play is homebuilding stock
(HOV - Get Report)
, which is set to release its numbers on Wednesday before the market open. Wall Street analysts, on average, expect Hovnanian Enterprises to report revenue of $381.11 million on a loss of 10 cents per share.
If you're looking for a heavily shorted stock that's been uptrending very strong heading into its earnings report this week, then make sure to take a hard look at shares of Hovnanian Enterprises. This stock has exploded higher during the last six months, with shares up a whopping 86%.
The current short interest as a percentage of the float for Hovnanian Enterprises is extremely high at 27.3%. That means that out of the 113.47 million shares in the tradable float, 30.35 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then this stock could explode higher post-earnings.
From a technical perspective, HOV is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways for the last month, with shares moving between $5.12 on the downside and $6.24 on the upside. A high-volume move above the upper end of that range could trigger a near-term breakout trade for HOV post-earnings.
If you're in the bull camp on HOV, 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 $6.18 to $6.24 a share and then once it takes out more resistance at $6.59 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 9.97 million shares. If that breakout triggers, then HOV will set up to re-test or possibly take out its next major overhead resistance levels at $7.43 a share.
I would simply avoid HOV 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 $5.14 to $5.12 a share with high volume. If we get that move, then HOV will set up to re-test or possibly take out its next major support levels at $4.26 to $4 a share.