Kratos Defense & Security Solutions
Another potential earnings short-squeeze candidate is Kratos Defense & Security Solutions (KTOS - Get Report), a specialized national security technology business providing mission-critical products, services and solutions for U.S. national security priorities. Kranos is set to release its numbers on Tuesday after the market close. Wall Street analysts, on average, expect the company to report revenue of $262.28 million on a loss of 7 cents per share.
The current short interest as a percentage of the float for Kratos Defense & Security stands at 9.7%. That means that out of the 44.25 million shares in the tradable float, 4.16 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 3.6%, or by about 147,000 shares. If the bears are caught pressing their bets into a strong quarter, then shares of KTOS could explode higher post-earnings.
From a technical perspective, KTOS 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 two months, with shares dropping from its high of $5.24 to its recent low of $4.08 a share. During that downtrend, shares of KTOS have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of KTOS have now started to rebound off that $4.08 low, and it's quickly moving within range of triggering a near-term breakout trade.If you're in the bull camp on KTOS, 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 $4.45 to $4.59 a share and then once it takes out more resistance at $4.71 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 352,542 shares. If that breakout triggers, then KTOS will set up to re-test or possibly take out its next major overhead resistance levels at $4.98 to its 200-day at $5.09 a share. Any high-volume move above its 200-day will then put $5.24 to $6 into range for shares of KTOS. I would avoid KTOS or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 52-week low of $4.08 a share with high volume. If we get that move, then KTOS will set up to enter new 52-week low territory, which is bearish technical price action. Some possible downside targets off that move are $3 a share or lower.