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My first earnings short-squeeze trade is designer, marketer, distributor and licenser of apparel for men, women and children
Guess(GES - Get Report), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Guess to report revenue of $785.57 million on earnings of 87 cents per share.
The current short interest as a percentage of the float for Guess is very high at 16.7%. That means that out of the 59.69 million shares in the tradable float, 9.89 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 21.2%, or by about 1.72 million shares. If the bears are caught pressing their bets too aggressively into a bullish quarter, then we could easily a sharp move higher for shares of GES post-earnings.
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From a technical perspective, GES is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently sold off from its high of $29.28 to its low of $26.70 a share. Shares of GES have started to rebound off that $26.70 low and are moving back above its 50-day moving average of $27.23 a share. That move is quickly pushing shares of GES within range of triggering a near-term breakout trade post-earnings.
If you're bullish on GES, 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 at $27.50 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.14 million shares. If that breakout triggers, then GES will set up to re-test or possibly take out its next major overhead resistance levels at $28.80 to $29.28 a share. Any high-volume move above those levels will then give GES a chance to re-fill some of its previous gap down zone from last September that started at $32.
I would avoid GES 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 $26.70 to $25.75 a share with high volume. If we get that move, then GES will set up to re-test or possibly take out its next major support levels at $24 to $23 a share.