I would simply avoid CIEN 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 its 200-day moving average of $14.82 a share and then below more support at $14.53 to $14.37 a share with high volume. If we get that move, then CIEN will set up to re-test or possibly take out its next major support levels at $13.52 to $12.50 a share.
Another potential earnings short-squeeze play is headphones and other audio accessories developer and distributor Skullcandy (SKUL), which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect Skullcandy to report revenue of $98.61 million on earnings of 48 cents per share.
If you're looking for a heavily shorted stock that's been destroyed by the bears heading into its earnings report, then make sure to take a hard look at shares of Skullcandy. This stock has been crushed by the sellers during the last six months, with shares down by 59%. That move has shares of SKUL currently trading just 20 cents off its 52-week low of $5.98 a share.The current short interest as a percentage of the float for Skullcandy is extremely high at 26%. That means that out of the 15.68 million shares in the tradable float, 4.40 million shares are sold short by the bears. If this company can deliver the earnings news the bulls are looking for, then we could easily see a monster short squeeze develop post-earnings. From a technical perspective, SKUL is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last six months, with shares falling from its high of $14.58 to its recent low of $5.98 a share. During that downtrend, shares of SKUL have been consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has recently formed a double bottom at $6 a share and its trending within range of triggering a near-term breakout trade.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV