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Another potential earnings short-squeeze trade is provider of integrated financial information and analytical applications to the investment community
FactSet Research Systems(FDS - Get Report), which is set to release its numbers on Tuesday before the market open. Wall Street analysts, on average, expect FactSet Research Systems to report revenue of $213.31 million on earnings of $1.11 per share.
Just recently, UBS said FactSet's share price performance shows positive headcount trends along with a better pricing environment. The firm thinks that a lower-than-expected ASV increase from U.S. investment management repricing or weaker user growth has the ability to cause a third-quarter guidance miss. The firm has a neutral rating on the stock.
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The current short interest as a percentage of the float for FactSet Research Systems is notable at 11.8%. That means that out of the 40.94 million shares in the tradable float, 4.86 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of FDS could rip higher post-earnings.
From a technical perspective, FDS is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $86.60 to its recent high of $101.05 a share. During that uptrend, shares of FDS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of FDS within range of triggering a near-term breakout trade post-earnings.
If you're in the bull camp on FDS, 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 $101.05 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 450,959 shares. If that breakout triggers, then FDS will set up to re-test or possibly take out its next major overhead resistance levels at $104.13 to $108.12 a share.
I would avoid FDS 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 $95.70 to its 200-day moving average at $93.48 a share with high volume. If we get that move, then FDS will set up to re-test or possibly take out its next major support levels at $90 to $88 a share.